Study on the economic growth effect of free trade zones based on counterfactual simulation: An empirical analysis from shaanxi regional economy

Institute of Transportation Engineering, Dalian Maritime University, Dalian 116026, Liaoning, China

^* Corresponding author: 18004081587@163.com

Abstract

The construction of Free Trade Zone (FTZ) is an important strategic initiative for China to build a new platform for comprehensive opening up and a new carrier for leading high-quality development. Based on SCM (synthetic control method) and DID (double difference method), the economic data of Shaanxi when the FTZ policy was not implemented (“counterfactual” simulation) are synthesized using quarterly economic panel data of 14 provincial regions from 2013 to 2019, and compared with the real data for analysis, in order to study the effect of the FTZ policy on Shaanxi’s economic The study finds that the impact of the FTZ policy on Shaanxi’s trade and consumption is not significant. The study finds that the FTZ policy has a significant enhancement effect on Shaanxi’s economic development and a significant promotion effect on trade, while the promotion effect on consumption is not significant. The innovation and features of this paper are two: firstly, based on the “counterfactual” simulation, the study investigates the growth effect of the FTZ policy on the regional economy in Shaanxi, and explores the mechanism of the FTZ policy affecting the regional economic growth from the perspective of trade and consumption, changing the existing studies which are only based on the analysis of the impact of the FTZ policy on the regional economy, without further exploring the mechanism of the impact. Secondly, the SCM and DID methods are used to evaluate the economic effects of the FTZ policy in Shaanxi, and the robustness of the research results is verified from multiple perspectives, such as replacement and pseudo-time.