Summary:

When evaluating a regional policy, it is important to consider composition changes, which are changes in the population or economy that result from the policy. Failing to account for these changes can lead to misleading evaluations. In a recent ACI working paper publication, we examine the effect of the Greater Bay Area on basic economic indicators in Guangdong. Taking into account these composition changes in the population of key cities in the GBA yields a more nuanced evaluation of the GBA impact.

Highlights:

• The Greater Bay Area is a fast-growing economic region in Southern China, including Hong Kong, Macau, and nine cities in Guangdong province. With ongoing development and integration efforts, a policy question is how forming the area leads to economic growth.
• Our study evaluates the change in Guangdong’s economic performance and finds a decrease in GDP per capita (figure a) which we trace to a sharp increase in population growth (figure b).
• Our findings suggest that evaluations of regional economic policies need to be multi-faceted, account for demographic shifts, and provide enough time for integration to avoid spurious results.

Article By SHEN Yan Shun, Lucas

Graphic By GE, Yixuan