Entrepreneurial effects of the Hainan free trade port: a synthetic control study

Purpose This study aims to investigate the role of the Hainan Free Trade Port, a uniquely experimental institutional design, in shaping regional entrepreneurial dynamics in China. Design/methodology/approach Using province-level panel data from 2003 to 2023, the authors used a synthetic control method to evaluate the policy’s effect on new firm registrations. To ensure robustness, they conduct spatial and temporal placebo tests, synthetic difference-in-differences estimations and incorporate staggered adoption designs. Findings The findings show that the Hainan FTP significantly increased new firm registrations. Industry-level heterogeneity analysis indicates that the effects are more pronounced in knowledge-intensive and modern service sectors, pointing to improvements not only in the quantity but also in the quality of entrepreneurial activity. Additionally, the policy enhanced the local fiscal capacity and contributed to the growth of new productive forces. Research limitations/implications First, while it identifies a significant positive impact of the Hainan FTP on entrepreneurship, it does not fully disentangle the underlying mechanisms, such as improvements in institutional quality, talent inflow or financial accessibility. Second, the analysis relies on province-level panel data, which restricts the exploration of firm-level or entrepreneur-specific heterogeneity. Practical implications This study offers practical implications for institutional reform and entrepreneurship policy. It demonstrates how the Hainan FTP boosts both the scale and quality of entrepreneurship, strengthens local fiscal capacity and fosters new productive forces. The findings provide actionable insights for designing free trade port policies, optimizing industrial support strategies and building dynamic evaluation frameworks to guide adaptive governance. Social implications The Hainan FTP showcases the social impact of building a uniquely positioned offshore free trade port, fostering institutional innovation, international connectivity and entrepreneurship-driven development. It serves as a model for balancing openness with local resilience, enhancing China’s global integration while supporting inclusive regional transformation. Originality/value To the best of the authors’ knowledge, this study is the first to use the synthetic control method to empirically evaluate the entrepreneurial impact of China’s only offshore Free Trade Port. It provides novel evidence on how high-level institutional openness stimulates entrepreneurship, enriching the literature on place-based economic reforms. The study highlights the unique institutional design of the Hainan FTP, which, unlike traditional free trade.