Industrial parks and urban growth: a political economy story in China

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

Chapter 14 in Handbook of Real Estate and Macroeconomics, 2022, pp 359-370 from Edward Elgar Publishing

Abstract: Over the last 30 years, the Chinese government has invested in new industrial parks with the intent of stimulating urban economic growth. The central government delegates the site selection decision to provincial leaders. A principal-agent issue arises because the central government prioritizes efficiency and equity criteria while the provincial leader may allocate such place based investments to reward socially connected mayors. We present a revealed preference test of industrial park site selection and document the willingness of China's provincial leaders to sacrifice economic development in order to reward social connections. We examine the causes and consequences of this misallocation of capital.

Keywords: Asian Studies; Economics and Finance; Urban and Regional Studies (search for similar items in EconPapers)
Date: 2022
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Working Paper: Industrial parks and urban growth: A political economy story in China (2020)
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