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Familiarity breeds growth: The impact of factional ties on local cadres’ economic performance in China
Author(s) -
Wong Stan HokWui,
Zeng Yu
Publication year - 2020
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/ecpo.12144
Subject(s) - insider , china , promotion (chess) , extant taxon , revenue , local government , politics , affect (linguistics) , economics , panel data , business , political science , public administration , finance , sociology , communication , evolutionary biology , law , biology , econometrics
Some attribute China's rapid economic growth to a cadre promotion system that rewards economic performance. Others argue that political promotion in China hinges on factionalism. Extant empirical studies often assume that performance can be measured independently from the effect of factionalism. We test the validity of this assumption by examining whether local cadres’ economic performance would change as a result of losing vertical ties to a higher authority. We find an immediate increase in the growth rates of local GDP and government revenue. However, the performance change is mediated by the type of succeeding leaders, as it occurs only under locally promoted leaders who have existing ties with the local cadres. We further examine various channels through which a leader's insider status may affect local economic performance and find that newly appointed outsider leaders would cut fiscal transfers to the local level, which may explain the drop in their short‐term performance.