When do place‐based assistance policies activate local entrepreneurial entry? Evidence from tourism‐related business formation in China's underdeveloped counties

Abstract

Why do similar place‐based assistance policies generate stronger entrepreneurial responses in some underdeveloped counties than in others? We argue that policy effects depend on counties' pre‐existing relative opportunity structure (ROS). Using China's county‐level assistance policies since 2013 as a quasi‐natural experiment, we estimate heterogeneous policy effects with a difference‐in‐differences design based on a 2007–2022 county panel. Assistance policies significantly increase tourism‐related entrepreneurial entry on average, but the magnitude varies systematically with pre‐policy ROS. We identify both convergence and complementarity patterns, highlighting the importance of local structural conditions for policy targeting and differentiated place‐based development policy.