Can territorial cooperation improve regional development? Evidence from Zhejiang’s Mountain-Sea Cooperation

Territorial cooperation is a key institutional tool to foster regional development. This study examines the causal effects of the Mountain-Sea Cooperation Project in China’s Zhejiang Province. Using 2010–2019 panel data and a difference-in-differences estimator, the paper measures the programme’s causal impact on inter-county investment flows and economic development. The results reveal a dual effect. We find that the policy increased investment flows between richer and poorer counties and boosted public economic outcomes, such as housing investment and fiscal revenue, in targeted areas. Yet, these gains failed to translate into household welfare, as the programme’s impact on individual income was negligible.