The Political Resource Blessing or Curse? Patronage Networks and the Varieties of Economic Development Models in China
LaFollette School of Public Affairs
University of Wisconsin-Madison
Thursday, April 8, 2021
On-line via Zoom
3:45 pm-5:00 pm
Although all governments desire higher economic growth, they adopt different strategies to promote growth. Conventional wisdom holds that the endowments of economic resources determine the economic development model that best utilizes the comparative advantage. With a difference-in-differences design applied to Chinese cities, this paper explores how the endowment of governments' political resources changes their economic development models. Although politically connected cities are more likely to obtain their superior's support to invest in infrastructure and promote the state-dominated industrial sectors, political resources also reduce a government's incentives to tap into the local resources for development. As a result, politically unconnected cities are more likely to improve the business environment to foster private entrepreneurship and accumulate fewer public debts. These results show that political resources make an economic model that features higher government investment and public debts more possible than the one that depends on vibrant entrepreneurship and private investment.