Can Local Rural Revitalization Policies Promote Urban–Rural Coordination? Quasi‐Experimental Evidence From Zhejiang Province's “Two Entries and Two Returns” Policy in China's Demonstration Zone for Shared Prosperity

ABSTRACT Urban–rural development imbalance is a common challenge for developing countries during urbanization. How institutional innovation can guide factor mobility and promote urban–rural coordination (URC) is therefore an important issue in urban–rural governance and regional development policy. This study examines the “Two Entries and Two Returns” policy implemented in Zhejiang Province, China. Using panel data for 30 Chinese provinces from 2010 to 2024, this study applies the synthetic control method (SCM) to estimate the policy effect on URC. It further uses data from Zhejiang's 11 prefecture‐level cities and fuzzy‐set qualitative comparative analysis (fsQCA) to examine the configurational pathways through which the policy affects URC. The synthetic control results show that the policy promotes URC. This finding remains robust to time, treatment group, and spatial placebo tests. The fsQCA results identify two pathways to high URC: a capital–actor synergy pathway and a capital‐led service‐compensation pathway. This study provides quasi‐experimental evidence on whether local rural revitalization policies can help narrow urban–rural development gaps in developing countries. It also shows that rural revitalization policies centered on factor mobility can support inclusive development by strengthening endogenous development capacity and promoting a more equitable sharing of development gains.