Governance capacity and economic growth: evidence from China’s top 100 counties and national-level poor counties

【Author】

WEN Yanbing;GUO Rui;SHI Jinchuan

【Institution】

School of Economics, Zhejiang University of Finance and Economics;School of Economics, Zhejiang University;Center for Research of Private Economy, Zhejiang University

【Abstract】

Novel coronavirus pneumonia (NCP) has been wreaking havoc in China since the beginning of the Chinese New Year in 2020. On February 3, the Standing Committee of the Political Bureau of the CPC Central Committee convened a central leadership meeting to tackle the NCP epidemic. During the meeting, President Xi stressed that infection prevention and control is a tremendous test for the system and for the capacity of governance in China. Improving the system and capacity of governance is a requirement for the development of socialism with Chinese characteristics, which is an inevitable path for China’s modernization and the latest extension of Marxist theory. Regardless of the disparities in history, tradition, national conditions, and philosophies of national governance and economic development between different countries, there is little doubt that the capacity of governance is playing an increasingly important role in national health protection and economic growth. The main contributions of this paper are as follows. First, drawing on the bias technology theoretical framework of Acemoglu (2002), this paper constructs a bias growth model of the capacity of local officials and provides the first theoretical investigation of the mechanisms of how the governance capacity of local officials influences economic growth at the county level. This analysis produces two main theoretical findings. (1) On a path of balanced economic growth, the economic growth rate in China is determined by the conversion rate of the officials’ capacity and the inputs of the production. (2) Under the market equilibrium, the optimal combination is determined by the boundary conversion rate of the officials’ capacity, the elasticity of the substitution rate, and the relative supply of the factors. Second, using data of 846 county-level administrative units in the top 100 counties and poverty-stricken counties from 2006 to 2015, this paper artificially constructs a matching dataset of the individual characteristics of the party secretaries and economic growth in China. This study is the first to quantitatively identify the effects of the economic governance capacity of county officials on local economic growth. This paper obtains Chinese county-level night light brightness data by extracting and continuously correcting the global night light brightness from DMSP-OLS from 2006–2011 and NPP-VIIRS from 2012–2015. The analysis produces two main empirical findings. (1) The individual characteristics of a county’s party secretaries have an important effect on the economic growth in their jurisdiction. The education-level of the secretaries has a relatively larger effect on the top 100 counties while the officials’ performance is more pronounced in the poverty-stricken counties. (2) The different individual characteristics of the officials match the development types of different counties. Notably, officials with postgraduate education, county party secretaries with comprehensive work experience, and party secretaries with grass-roots promotions increase the economic growth of the top 100 counties and poverty-stricken counties. In addition, county party secretaries with postgraduate education and comprehensive work experience are more beneficial to the economic growth of the top 100 counties, and county party secretaries with a combination of economics and management education background and grass-roots work experience are more beneficial to the economic growth of the poverty-stricken counties. Therefore, it is of great significance to stress and improve the individual capacity of government officials at all levels and match the officials’ governance capacity with the different types of jurisdictions. As the economic transformation and modernization of China is a substantial long-term project, governance capacity plays a significant role in the modernization of the national governance system, which has helped leverage the strengths of socialism with Chinese characteristics to increase the efficiency of development. In addition to revealing the role that the official governance of economic development plays in China, the findings have important implications for the modernization of China’s governance system with regards to the selection, appointment, and capacity improvement of officials.

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Total: 46 articles

  • [1] Zhang Jun and Gao Yuan(China Center for Economic Studies, Fudan University), Term Limits and Rotation of Chinese Governors:Do They Matter to Economic Growth?, Economic Research Journal,
  • [2] Zhang Jun, Gao Yuan, Fu Yong and Zhang Hong(China Center for Economic Studies, Fudan University), Why Does China Enjoy So Much Better Physical Infrastructure?, Economic Research Journal,
  • [3] Xu Xianxiang, Wang Xianbin and Shu Yuan(Lingnan College, Sun Yat-sen University), Local Officials and Economic Growth, Economic Research Journal,
  • [4] Zhou Li-an (Guanghua School of Management and IEPR, Peking University), Governing China's Local Officials:An Analysis of Promotion Tournament Model, Economic Research Journal,

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