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Mandarins make markets: Leadership rotations and inter-provincial trade in China

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  • Jiang, Junyan
  • Mei, Yuan

Abstract

The careers of many public officials span multiple localities, yet the economic effects of their inter-regional movements are not well understood. This paper focuses on the rotation of provincial leaders in China and studies its impact on regional economic integration. Estimation results using the gravity framework indicate that when a provincial leader is appointed as the party secretary of a new province, the trade volume from the new province to the old province increases, but not vice versa. Additional analyses using two novel datasets that capture the intensity of inter-provincial socioeconomic activities in China corroborate this finding. We then construct a quantitative trade model that incorporates input-output linkages and show that removing such inter-provincial links associated with the rotation of provincial leaders leads to an average welfare loss of 0.03%.

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  • Jiang, Junyan & Mei, Yuan, 2020. "Mandarins make markets: Leadership rotations and inter-provincial trade in China," Journal of Development Economics, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:deveco:v:147:y:2020:i:c:s0304387820300997
    DOI: 10.1016/j.jdeveco.2020.102524
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    More about this item

    Keywords

    Regional integration; Domestic trade; Leadership rotation in China;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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