Domestic Market Integration and Regional Economic Growth-China's Recent Experience from 1995-2011

This paper constructs an enhanced indicator for trade barrier and examines the endogenous relationship between market integration and regional economies across China from 1995 to 2011. Beyond the current literature, this study shows: the endogenous relationship is significant, reflecting a virtuous cycle; domestic openness contributes to the economies in the central region more than in the other regions; the feedback effect is stronger in the eastern and central regions than in the western and northeastern; domestic openness and regional economies are adversely affected by state-owned enterprises and government non-productive expenditure. Several policy implications relevant to Chinese economy are drawn from the findings.