Economic policy uncertainty, resource endowments and industrial structure transformation

Fangyu Ye, Jingjing Deng, Bibang Gong and Zhiyao Zeng

Journal of the Asia Pacific Economy, 2024, vol. 29, issue 1, 341-361

Abstract: This article examines the impact of economic policy uncertainty (EPU) on the industrial structure using panel data of 275 prefecture-level cities in China from 2003 to 2018 with the mediating effect of resource endowments. We find that uncertainty about economic policy has an inverted U-shaped relationship with industrial structure. Moreover, the positive relationship between EPU and industry structure is more prominent for cities with abundant natural resources. In addition, from the perspective of the three industries, EPU has an inverted U-shaped relationship with the primary and tertiary sectors and a U-shaped relationship with the secondary sector. EPU has a positive threshold effect on the rationalization of industrial structure. These results suggest that local governments should consider EPU to promote industrial structure transformation and strengthen its governance capacity to reduce the negative impact of EPU.

Date: 2024
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DOI: 10.1080/13547860.2021.2024379

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