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ABSTRACT

This paper assesses whether cities enhance the technical efficiency of nearby rural counties by allowing for heterogeneous urban effects both by region and city type. An empirical application is demonstrated using the Chinese county-level agricultural data from 2005 to 2009. We find that urban proximity significantly enhances efficiency in the Eastern region, while its effect is lower and less significant for the Central region and not significant at all for the Western region. In addition, urban effects vary across the urban hierarchy. We find that provincial-level cities have a deteriorating impact on technical efficiency, while lower-level cities enhance technical efficiency in most regions. Implications of these findings in terms of urban and regional planning are discussed.