The effect of key universities on the regional development: empirical evidence from two natural experiments in China

Universities play a crucial role as anchor institutions in regional development. Using the data from the China City Statistical Yearbook from 1995 to 2011, the synthetic control method was employed to examine the impact of key universities on regional development. Results showed that the expansion of higher education significantly influenced the population density in Xuzhou, and per capita output of secondary industry in both Xuzhou and Dongying; yet it has minimal impact on the per capita GDP and average employee wages of the two cities. Thus, key universities may affect regional development by enhancing the quantity and quality of human capital accumulation rather than directly promoting economic growth.