Does flattening government improve economic performance? Evidence from China

Pei Li, Yi Lu and Jin Wang

Journal of Development Economics, 2016, vol. 123, issue C, 18-37

Abstract: This paper examines a causal relationship between the flattening of a government hierarchy and economic performance by exploiting a panel data set on government reorganization in China from 1995 to 2012. Delayering has led to increases in revenue and inter-governmental transfers for county governments, but the associated enlarged span of control makes it difficult for upper-level governments to coordinate and monitor local ones. This has led to a reduction in county governments' total public expenditure and pro-growth expenditure, as well as an increase in land corruption. Overall, the flattening of the government hierarchy has a negative effect on economic performance.

Keywords: Flattening; Government; Hierarchies; Organization structures; Province managing county (search for similar items in EconPapers)
JEL-codes: H11 O12 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (384)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:123:y:2016:i:c:p:18-37

DOI: 10.1016/j.jdeveco.2016.07.002

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