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Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study

Author

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  • Echevarría, Cruz A.

    (University of the Basque Country UPV/EHU, Spain)

  • Hasancebi, Serhat

    (University of the Basque Country UPV/EHU, Spain)

  • García-Enríquez, Javier

    (University of the Basque Country UPV/EHU, Spain)

Abstract

Macao was a Portuguese colony until 1999, when its sovereignty was transferred to China, initiating its integration process. This article attempts to estimate the consequences of this socio-economic process in terms of per capita gross domestic product (GDP). We build a panel data set spanning 1970 to 2012, with 25 countries, setting 2000 as the initial treatment year for the integration process. The analysis is carried out through two alternative methodologies: the synthetic control method and the panel data approach. The integration treatment had a significant, positive effect on Macao’s per capita GDP. As additional outcome variables, we also analyze the effects of integration on the per capita net inflow of foreign direct investment, the unemployment rate, and the per capita exports and imports of goods and services.

Suggested Citation

  • Echevarría, Cruz A. & Hasancebi, Serhat & García-Enríquez, Javier, 2022. "Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 179-215.
    • Handle: RePEc:ris:integr:0848
    DOI: 10.11130/jei.2022.37.2.179
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    More about this item

    Keywords

    comparative case studies; synthetic control method; panel data approach; causal inference; integration; Macao;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models

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