Empowering Cities : Good for Growth? Evidence from the People's Republic of China

This paper utilizes a countrywide process of county-to-city upgrading in the 1990s to identify whether extending the powers of urban local governments leads to better firm outcomes. The paper hypothesizes that since local leaders in newly promoted cities have an incentive to utilize their new admini...

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Main Authors:	Mukim, Megha, Zhu, T. Juni
Format:	Journal Article
Published:	The MIT Press 2018
Subjects:	CAPACITY CREDIT ALLOCATION DECENTRALIZATION FIRM-LEVEL DATA URBAN DEVELOPMENT URBAN GOVERNANCE STATE-OWNED ENTERPRISES LOCAL GOVERNMENT URBANIZATION
Online Access:	http://hdl.handle.net/10986/29658

id	okr-10986-29658
recordtype	oai_dc
spelling	okr-10986-296582021-05-26T09:05:20Z Empowering Cities : Good for Growth? Evidence from the People's Republic of China Mukim, Megha Zhu, T. Juni CAPACITY CREDIT ALLOCATION DECENTRALIZATION FIRM-LEVEL DATA URBAN DEVELOPMENT URBAN GOVERNANCE STATE-OWNED ENTERPRISES LOCAL GOVERNMENT URBANIZATION This paper utilizes a countrywide process of county-to-city upgrading in the 1990s to identify whether extending the powers of urban local governments leads to better firm outcomes. The paper hypothesizes that since local leaders in newly promoted cities have an incentive to utilize their new administrative remit to maximize gross domestic product and employment, there should be improvements in economic outcomes. In fact, aggregate firm-level outcomes do not necessarily improve after county-to-city graduation. However, state-owned enterprises perform better after graduation, with increased access to credit through state-owned banks as a possible explanation. Importantly, newly promoted cities with high capacity generally produce better aggregate firm outcomes compared with newly promoted cities with low capacity. The conclusions are twofold. First, relaxing credit constraints for firms could lead to large increases in their operations and employment. Second, increasing local government's administrative remit is not enough to lead to better firm and economic outcomes; local capacity is of paramount importance. 2018-04-11T18:32:07Z 2018-04-11T18:32:07Z 2018-03 Journal Article Asian Development Review http://hdl.handle.net/10986/29658 CC BY 4.0 http://creativecommons.org/licenses/by/4.0 World Bank The MIT Press Publications & Research :: Journal Article Publications & Research East Asia and Pacific China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	CAPACITY CREDIT ALLOCATION DECENTRALIZATION FIRM-LEVEL DATA URBAN DEVELOPMENT URBAN GOVERNANCE STATE-OWNED ENTERPRISES LOCAL GOVERNMENT URBANIZATION
spellingShingle	CAPACITY CREDIT ALLOCATION DECENTRALIZATION FIRM-LEVEL DATA URBAN DEVELOPMENT URBAN GOVERNANCE STATE-OWNED ENTERPRISES LOCAL GOVERNMENT URBANIZATION Mukim, Megha Zhu, T. Juni Empowering Cities : Good for Growth? Evidence from the People's Republic of China
geographic_facet	East Asia and Pacific China
description	This paper utilizes a countrywide process of county-to-city upgrading in the 1990s to identify whether extending the powers of urban local governments leads to better firm outcomes. The paper hypothesizes that since local leaders in newly promoted cities have an incentive to utilize their new administrative remit to maximize gross domestic product and employment, there should be improvements in economic outcomes. In fact, aggregate firm-level outcomes do not necessarily improve after county-to-city graduation. However, state-owned enterprises perform better after graduation, with increased access to credit through state-owned banks as a possible explanation. Importantly, newly promoted cities with high capacity generally produce better aggregate firm outcomes compared with newly promoted cities with low capacity. The conclusions are twofold. First, relaxing credit constraints for firms could lead to large increases in their operations and employment. Second, increasing local government's administrative remit is not enough to lead to better firm and economic outcomes; local capacity is of paramount importance.
format	Journal Article
author	Mukim, Megha Zhu, T. Juni
author_facet	Mukim, Megha Zhu, T. Juni
author_sort	Mukim, Megha
title	Empowering Cities : Good for Growth? Evidence from the People's Republic of China
title_short	Empowering Cities : Good for Growth? Evidence from the People's Republic of China
title_full	Empowering Cities : Good for Growth? Evidence from the People's Republic of China
title_fullStr	Empowering Cities : Good for Growth? Evidence from the People's Republic of China
title_full_unstemmed	Empowering Cities : Good for Growth? Evidence from the People's Republic of China
title_sort	empowering cities : good for growth? evidence from the people's republic of china
publisher	The MIT Press
publishDate	2018
url	http://hdl.handle.net/10986/29658
_version_	1764469908530266112

Empowering Cities : Good for Growth? Evidence from the People's Republic of China

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