Does flattening government improve county-level economic resilience? Evidence from the Province-Managing-County reform in China
DOI:
https://doi.org/10.52152/800168Ključne besede:
Flattening Government; county-level economic resilience; Province-Managing-County; Time-Varying Difference-in-DifferencesPovzetek
Improving regional economic resilience is a key goal for governments around the world to address global economic instability. This paper employs a quasi-natural experiment of “Province-Managing-County” (PMC) reform in China, uses a time-varying DID method to investigate the mechanism and the impact of the flattening government on county-level economic resilience (CER) in China. Through empirical analysis of county-level data in China from 2000 to 2020, we found that government flattening significantly improved CER. The heterogeneity test results indicate that cities located in eastern China, regions with higher levels of economic development, and industries with higher levels of industrial upgrading are more affected by PMC reform. A reliable mechanism indicates that PMC policies effectively affect CER by promoting fiscal self-sufficiency, narrowing the urban-rural gap, and improving local innovation levels. Therefore, government should promote and improve PMC reform to address regional disparities and enhance local fiscal capacity, which is an important measure to enhance regional economic development.
Literatura
.Bo, S., Wu, Y., & Zhong, L. (2020). Flattening of government hierarchies and misuse of public funds: evidence from audit programs in China. Journal of economic behavior & organization, 179, 141-151.
.Beck, T., Levine, R., & Levkov, A. (2010). Big bad banks? The winners and losers from bank deregulation in the United States. The journal of finance, 65(5), 1637-1667.
.Cai, G., Zhang, X., & Yang, H. (2022). Fiscal stress and the formation of zombie firms: Evidence from China. China Economic Review, 71.
.Cavusoglu, T., & Dincer, O. (2015). Does decentralization reduce income inequality? Only in rich states. Southern Economic Journal, 82(1), 285-306.
.Commons, J. R. (1932). Institutional economics: Comment by professor Commons. The American Economic Review, 22(2), 264-268.
.Cui, Z., Li, E., Li, Y., Deng, Q., & Shahtahmassebi, A. (2023). The impact of poverty alleviation policies on rural economic resilience in impoverished areas: A case study of Lankao County, China. Journal of Rural Studies, 99, 92-106.
.Ding, S., Yang, Y., & Wang, H. (2023). Dose county administrated by province policy promote the equalization of county-level basic public services? China Soft Science, (03):74-84.
.Du, Y., Wang, Q., & Zhou, J. (2023). How does digital inclusive finance affect economic resilience: Evidence from 285 cities in China. International Review of Financial Analysis, 88.
.Eichengreen, B., Park, D., & Shin, K. (2024). Economic resilience: Why some countries recover more robustly than others from shocks. Economic Modelling, 106748.
.Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. Journal of econometrics, 225(2), 254-277.
.Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica: Journal of the econometric society, 153-161.
.Hou, S., Zhang, Y., & Song, L. (2023). Digital finance and regional economic resilience: Evidence from 283 cities in China. Heliyon, 9(10), e21086.
.Hu, X., Li, L., & Dong, K. (2022). What matters for regional economic resilience amid COVID-19? Evidence from cities in Northeast China. Cities, 120, 103440.
.Hu, X., & Yang, C. (2019). Institutional change and divergent economic resilience: Path development of two resource-depleted cities in China. Urban Studies, 56(16), 3466-3485.
.Huang, B., Gao, M., Xu, C., & Zhu, Y. (2017). The impact of Province-Managing-County fiscal reform on primary education in China. China Economic Review, 45, 45-61.
.Lee, S., & Wang, S. (2023). Impacts of political fragmentation on inclusive economic resilience: Examining American metropolitan areas after the Great Recession. Urban Studies, 60(1), 26-45.
.Lessmann, C. (2012). Regional inequality and decentralization: an empirical analysis. Environment and planning a, 44(6), 1363-1388.
.Lester, T. W., & Nguyen, M. T. (2016). The Economic Integration of Immigrants and Regional Resilience. Journal of Urban Affairs, 38(1), 42-60.
.Li, P., Lu, Y., & Wang, J. (2016). Does flattening government improve economic performance? Evidence from China. Journal of development economics, 123, 18-37.
.Li, Y., Hao, S., Han, Q., Guo, X., Zhong, Y., Zou, T., et al. (2024). Study on urban economic resilience of Beijing, Tianjin and Hebei based on night light remote sensing data during COVID-19. Science of Remote Sensing, 9.
.Liu, Y., & Alm, J. (2016). “Province-Managing-County” fiscal reform, land expansion, and urban growth in China. Journal of Housing Economics, 33, 82-100.
.Liu, Y., Zhang, Z., Zhai, H., & Chan, K. C. (2023). Does flattening the government hierarchy improve corporate innovation? Evidence from China. Regional Studies, 57(8), 1559-1577.
.Martin, R. (2012). Regional economic resilience, hysteresis and recessionary shocks. Journal of economic geography, 12(1), 1-32.
.Qian, Y., & Roland, G. (1998). Federalism and the soft budget constraint. American economic review, 1143-1162.
.Qian, Y., & Weingast, B. R. (1997). Federalism as a commitment to preserving market incentives. Journal of Economic perspectives, 11(4), 83-92.
.Rodríguez-Pose, A., & Ezcurra, R. (2010). Does decentralization matter for regional disparities? A cross-country analysis. Journal of Economic Geography, 10(5), 619-644.
.Rodriguez-Ward, D., Larson, A. M., & Ruesta, H. G. (2018). Top-down, Bottom-up and Sideways: The Multilayered Complexities of Multi-level Actors Shaping Forest Governance and REDD+ Arrangements in Madre de Dios, Peru. Environ Manage, 62(1), 98-116.
.Rosenbaum, P. R., & Rubin, D. B. (1983). The central role of the propensity score in observational studies for causal effects. Biometrika, 70(1), 41-55.
.Scott, W. R. (2013). Institutions and organizations: Ideas, interests, and identities. Sage publications.
.Sui, H., Geng, S., Zhou, J., Raza, A., & Aziz, N. (2023). Fiscal institutional reform and export product quality: Quasi-experimental research on counties managed directly by provinces. Economic Modelling, 126.
.Tan, J., Hu, X., Hassink, R., & Ni, J. (2020). Industrial structure or agency: What affects regional economic resilience? Evidence from resource-based cities in China. Cities, 106.
.Tian, Y., & Guo, L. (2023). Digital development and the improvement of urban economic resilience: Evidence from China. Heliyon, 9(10), e21087.
.Tian, X., Zhang, X., Zhou, Y., & Yu, X. (2016). Regional income inequality in China revisited: A perspective from club convergence. Economic Modelling, 56, 50-58.
.Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of political economy, 64(5), 416-424.
.Wang, W., Zheng, X., & Zhao, Z. (2011). Fiscal Reform and Public Education Spending: A Quasi-natural Experiment of Fiscal Decentralization in China. Publius: The Journal of Federalism, 42(2), 334-356.
.Weingast, B. R. (2014). Second Generation Fiscal Federalism: Political Aspects of Decentralization and Economic Development. World Development, 53, 14-25.
.Wing, C., Simon, K., & Bello-Gomez, R. A. (2018). Designing difference in difference studies: best practices for public health policy research. Annual review of public health, 39, 453-469.
.Xu, S., Zhong, M., & Wang, Y. (2024). Can innovative industrial clusters enhance urban economic resilience? A quasi-natural experiment based on an innovative pilot policy. Energy Economics, 134.
.Yang, Y., Lin, Z., Xu, Z., & Liu, S. (2024). The impact of digital finance on regional economic resilience. Pacific-Basin Finance Journal, 85.
.Yang, Z. (2016). Tax reform, fiscal decentralization, and regional economic growth: New evidence from China. Economic Modelling, 59, 520-528.
.Yao, D., & Zhang, S. (2017). How to “Delegate Power” optimally? The optimal boundary of administrative centralization and decentralization. Journal of Finance and Economics, 43(04):41-54. (in Chinese)
.Zhang, Q., Yang, L., & Song, D. (2020). Environmental effect of decentralization on water quality near the border of cities: Evidence from China's Province-managing-county reform. Sci Total Environ, 708, 135154.
.Zhao, R., Zhong, S., & Zhang, J. (2022). Unintended Consequences: Flattening of government hierarchies and air pollution control. The Journal of World Economy, 45(02):162-187. (in Chinese)
.Zhou, X., Zhang, Y., Wang, W., & Sun, Y. (2024). Spatial-temporal variation of economic resilience and its influencing factors under COVID-19: Evidence from Henan province, China. International Journal of Disaster Risk Reduction, 105.
.Zhu, D., Chen, K., Sun, C., & Lyu, C. (2023). Does environmental pollution liability insurance promote environmental performance? Firm-level evidence from quasi-natural experiment in China. Energy Economics, 118, 106493.
Objavljeno
Številka
Rubrika
Licenca
Avtorske pravice (c) 2025 Lex localis - Journal of Local Self-Government
To delo je licencirano pod Creative Commons Priznanje avtorstva-Nekomercialno-Brez predelav 4.0 mednarodno licenco.
