Are Place-Based Policies Always a Blessing? Evidence from China's National Poor County Programme

In this paper, we evaluate the effects of a large-scale and continuing place-based policy in China. In 1994, the Chinese central government designated 592 counties as National Poor Counties (NPC), which have been receiving preferential treatment in several aspects. Our identification strategy exploits a discontinuous criterion for determining a county's eligibility of the programme. We find that the NPC programme failed to foster local economic growth. Further investigation suggests that local capture is partly responsible for this failure. Our findings yield important policy implications that, in countries with limited local accountability, place-based policies characterised by decentralised implementation are not always a blessing.