Anti-corruption campaign and economic growth in Chinese cities: The dichotomous mechanism of network-based political competition

Xiangyu Shi

European Journal of Political Economy, 2024, vol. 83, issue C

Abstract: I study how economic growth in Chinese cities responds to the recent anti-corruption campaign, focusing on a novel mechanism of network-based political competition, whereby the removal of investigated officials creates job vacancies and triggers promotion competition within the social network of the investigated officials for the vacancies. Such a network-based competition hinges on the premise that (1) some positions are persistently occupied by certain networks, and (2) high-ranked officials help low-ranked ones to achieve promotion within the network, two facts that are well supported by the evidence. Using a difference-in-differences and an instrumental variable approach, I find that cities’ GDP growth rate registers a 2.5-percentage-point increase following the investigation of the city leader’s connected officials. City leaders create a healthier business environment, attract investments, and increase government spending, while some long-term issues, including innovation, education, and environmental protection, are compromised, indicating the dichotomous nature of political competition.

Keywords: Anti-corruption; Social networks; Factions; Intra-network competition; Economic growth (search for similar items in EconPapers)
JEL-codes: D72 D73 M51 O12 O43 O47 P16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:83:y:2024:i:c:s017626802400051x

DOI: 10.1016/j.ejpoleco.2024.102549

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