The impact of marketization on sustainable economic growth-evidence from West China

Abstract

In this paper, we aim to study the relation between the marketization level in the western region of China and its economic development, and to provide policy guidance for the economic development of underdeveloped regions. Mixed methods data analysis was conducted using panel data from 82 prefecture-level cities in west China from 2003 to 2017. The overall regression results show that the level of marketization has a significant role in promoting economic growth. At the same time, regional heterogeneity analyses show that the sub-indicators of marketization have different degrees of influence on economic growth in the southwest and northwest of China, whereas the overall level indicator plays a significant role in both regions. In addition, the threshold panel model was used to test whether the influence of marketization on economic growth in the western region had interval characteristics. Through the self-sampling method, it was found that there are double thresholds. In terms of the gradual progress of the marketization level range, it shows a trend of first increasing, then decreasing and then increasing again. The results show that the level of marketization in west China has significantly promoted the economic development of the western region. Additionally, the impact of marketization on economic development in relatively backward regions is gradually increasing and surpassing that of relatively developed regions. Underdeveloped areas in west China can stimulate their advantages by continuously promoting the construction of marketization and improving the level of economic organization, so as to gradually narrow the development gap between regions.