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The Revealed Preference of the Chinese Communist Party Leadership: Investing in Local Economic Development versus Rewarding Social Connections / Matthew E. Kahn, Weizeng Sun, Jianfeng Wu, Siqi Zheng.
- Format:
- Book
- Author/Creator:
- Kahn, Matthew E.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24457.
- NBER working paper series no. w24457
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Revealed Preference of the Chinese Communist Party Leadership
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- 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.
- Notes:
- Print version record
- March 2018.
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