Development Zones and Their Surrounding Host Cities in China: Isolation and Mutually Beneficial Interactions

The construction of development zones is an important strategic measure for China to attract foreign investment and open up more extensively to the outside world; for this reason, such zones are also of great significance to China’s regional development. Although the economic effects of development zones have received extensive attention from scholars, the interaction between the development zone and the host city that surrounds it has, to date, remained unexamined. To fill this gap, this research constructed a panel measurement analysis framework and selected 46 of China’s national development zones established from 2004 to 2018 as study samples and used Granger causality test method to reveal the causal relationship between the total factor productivity of the development zones and their surrounding host cities. The consequences exhibited a long-term causality between the total factor productivity of the development zones and that of the host cities in all the panels. Short-term causality, however, was only identified in the eastern and western area panels. The development zone is shown to significantly promote the development of its host city, albeit with a certain lag effect; conversely, the support function provided by the host city to the development zone was found to remain weak. Our research results provide a new perspective on realizing a mutually beneficial interaction between development zones and their host cities.