Political hierarchy and regional economic development: Evidence from a spatial discontinuity in China

Junxue Jia, Xuan Liang and Guangrong Ma

Journal of Public Economics, 2021, vol. 194, issue C

Abstract: This study investigates the effect of political hierarchy on regional economic development using evidence from Chongqing’s promotion to the level of a province in China. In 1997, the prefecture-level Chongqing city was elevated to a province-level municipality, splitting off from Sichuan province, and it consequently gained a substantial increase in decision-making power for administrative, personnel, and fiscal affairs. The border areas between Chongqing and Sichuan had similar characteristics prior to treatment, allowing us to adopt a spatial regression discontinuity approach. Examining growth in town-level light intensity from 1992–2013, we find that economic activities of Chongqing towns are parallel with Sichuan towns before treatment, but activities increase sharply immediately following Chongqing’s promotion, implying an increase of 1.8 percentage-points in the annual GDP growth rate. Furthermore, we find that government officials of Chongqing have higher accountability and enact more pro-growth policies than officials of Sichuan. The results provide new evidence that empowering local governments through increased political hierarchy promotes regional development.

Keywords: Political hierarchy; Decentralization; Administrative unit proliferation; Economic growth (search for similar items in EconPapers)
JEL-codes: H11 H77 O12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272720302164
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:pubeco:v:194:y:2021:i:c:s0047272720302164

DOI: 10.1016/j.jpubeco.2020.104352

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

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