Do political connections help or hinder urban economic growth? Evidence from 1,400 industrial parks in China

Matthew Kahn, Weizeng Sun, Jianfeng Wu () and Siqi Zheng

Journal of Urban Economics, 2021, vol. 121, issue C

Abstract: Over a period of more than three decades, the Chinese government has created more than 1,400 new industrial parks, which have played a key role in creating manufacturing jobs and in attracting foreign direct investment, both nationally and locally. Provincial leaders who choose the location of such parks have political career incentives to select sites that increase regional economic growth, but also to select sites that reward city officials with whom they have connections. By exploiting plausibly exogenous changes in political connections, we document that city officials with connections to key provincial decision-makers are more likely to win parks. We estimate the heterogeneous urban growth effects of attracting such place-based investments. We find that industrial park sites chosen largely as a result of favorable political connections generate lower economic benefits than those chosen largely based on their economic fundamentals.

Keywords: Place-based investment; Industrial Parks; China; Political connections (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0094119020300607
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:121:y:2021:i:c:s0094119020300607

DOI: 10.1016/j.jue.2020.103289

Access Statistics for this article

Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange

More articles in Journal of Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().