Abstract:

The reform of provincial-managed counties is regarded as a crucial measure for economic development that narrows the urban-rural divide. However, the existing research has not conclusively shown whether it reduces the “three major” disparities and advances the equalization of public services, two key policy goals for achieving common prosperity. This paper uses panel data from the reform of Zhejiang province's provincial-managed counties from 1997 to 2017. By applying the difference-in-differences method, the paper examines the overall impact of these reforms on achieving the primary policy objectives of common prosperity. The findings suggest that both the pilot and full implementation phases of the reforms had a positive effect on common prosperity, showing an increasing trend over time. Further analysis reveals regional differences in these positive effects. The “three major” provincial-managed county pilot programs displayed characteristics of “the weak becoming stronger, the strong getting stronger.” The “full implementation” phase demonstrated features of “suppressing the strong to support the weak, and promoting collaborative development.” These findings have significant implications for optimizing the provincial county management system and exploring innovative policy paths to achieving common prosperity.

Key words: provincial-directly managed county, common prosperity, economic development, urban-rural divide, resource redistribution