This paper investigates the impact of inter-provincial trade on economic growth in China using panel data from 29 provinces (2000-2021) and a two-way fixed effects model. The study finds a significant positive effect, with each 1% increase in inter-provincial trade raising per capita GDP by 0.19%. This effect operates through technology improvement and industrial structure upgrading, but these mechanisms exhibit regional heterogeneity. Technology improvement is significant in central and western regions, while industrial structure upgrading is significant in eastern and central regions. The authors suggest region-specific policies to maximize the growth-promoting effects of inter-provincial trade.

Jianyue Ji, Qining Shan, Xingmin Yin