“Moving Umbrella”: Bureaucratic transfers and the comovement of interregional investments in China

Xiangyu Shi, Tianyang Xi, Xiaobo Zhang and Yifan Zhang

Journal of Development Economics, 2021, vol. 153, issue C

Abstract: This paper studies the pattern of interregional investment after bureaucratic transfers across Chinese cities. Using the administrative records of business registration, we find that the transfer of a local leader between prefecture cities is associated with about 3% increase in interregional investment along the direction of transfer. The comoving firms purchase larger parcels of land and at lower prices. They also exhibit a higher likelihood of exiting when the patrons leave the office. Comoving interregional investment does not increase the probability of promotion for transferred leaders, and yet expose them to a higher risk of anticorruption prosecution. The findings highlight the importance of personal connection between firms and bureaucrats in shaping the pattern of interregional investment.

Keywords: Bureaucratic transfer; Interregional investment; Comoving firms; China (search for similar items in EconPapers)
JEL-codes: D72 D73 O16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:153:y:2021:i:c:s0304387821000900

DOI: 10.1016/j.jdeveco.2021.102717

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