Special Economic Zone and Local Economic Performance in China: Evidence From Tianjin

Using China's 2006 national strategy on special economic zone (SEZ) in Tianjin, we quantitatively evaluate the effects of SEZ on local economic performance in China. Due to the fact that Tianjin is the only municipality affected by this policy, we adopt a new and simple-to-implement policy evaluation method. The method exploits the economic dependence among different provinces in China and constructs the counterfactual economic growth of Tianjin using data from provinces other than Tianjin. The policy effects are then just the difference between the actual economic growth of Tianjin and the counterfactuals. Using the method, we find that the SEZ policy in 2006 substantially enhanced GDP, investment, employment and export in Tianjin.