A Study on the Impact of Free Trade Zones on Regional Service Innovation Capability: Experimental Evidence from Guangdong Province Free Trade Zone

This paper uses the time cycle of nearly 20 years from 1999 to 2018, using the relevant panel data of 31 provinces and municipalities directly under the central government. Taking the establishment of Guangdong Free Trade Zone (FTZ) as a quasi-natural experiment to study the regional service innovation ability, the differences-in-differences method (DID) and the synthetic control method (SCM) were used to test the impact of the establishment of the FTZ on the regional service innovation ability. SCM compares the development track of non-FTZ and FTZ by constructing counterfactual analysis framework. As an auxiliary analysis method, DID also draws the conclusion that the FTZ policy has a positive role in promoting the development of regional service innovation ability, which has passed the robustness test. This paper expounds the operation basis of Guangdong Free Trade Zone, and puts forward policy suggestions for its future development. The results show that after the establishment of the FTZ, the average value of the regional service innovation capacity of Guangdong Province shows an obvious growth trend compared with the non-established provinces; the FTZ policy has a strong role in promoting regional service industry.