Does Local Government Debt Boost Industrial Structure Upgrading? The Evidence from China

Tianyang Wang (), Jingcheng Li, Linan Gao () and Xinyi Mei
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Tianyang Wang: Beijing JiaoTong University
Jingcheng Li: Beijing JiaoTong University
Linan Gao: Beijing JiaoTong University
Xinyi Mei: Beijing JiaoTong University

A chapter in LISS 2023, 2024, pp 214-231 from Springer

Abstract: Abstract Issuing local debt is an important way for the government to raise development funds, and its impact on industrial structure upgrading has always been controversial. This paper employs the fixed effect model and the panel data of 30 provinces in China from 2010–2017 to study local government debt’s influence on local industrial structure upgrading progress. Results show that government debt could boost industrial structure upgrading, and this mechanism works via promoting innovation activities. However, such promoting effect brings side effect: the decrease of total factor productivity (TFP). What is more, regional differences are evident: The eastern region is more sensitive to such influence. At this stage, China needs to improve the proportion of productive-debt and keep improving the governance of grassroots officials.

Keywords: local government debt; industrial structure upgrading; innovation activities; China (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-981-97-4045-1_17

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DOI: 10.1007/978-981-97-4045-1_17

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