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The Economic Effects of China's Pilot Free Trade Zones: A Empirical Test based on Difference in Differences

Author(s)

Jinyi Zhang

Affiliation(s)

School of Information, North China University of Technology, Beijing, China

Abstract

Free trade pilot zones have good conditions for reform in investment, trade, finance, regulation, and taxation, economic data from 18 provinces in China from 2010 to 2019 were collected. Seven provinces including Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and Shaanxi were selected as experimental groups. The double difference method (DID) was used to investigate whether the establishment of free trade zones has promoted exports and imports. The empirical results show that: The reform in the pilot free trade zone has a significant positive driving effect on the total import and export trade volume, as well as the total export trade volume. Before the implementation of the free trade pilot zone reform, there was no significant difference in the total export value between the experimental group and the control group. However, after the implementation of the reform in free trade pilot zone, there was a significant difference in the total export value between the experimental group and the control group. A certain positive spillover effect on the economic development of the province, and this effect still holds under strict and stable conditions.

Keywords

Pilot Free Trade Zone; Experiments; Economic Effects; Overflow Effect; Double Difference Method

References

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