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Fade into the Shadows: Adjustments in Administrative Divisions and Regional Disparities

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  • Jie, Yangyang
  • Zhang, Peikang
  • Shen, Tiyan

Abstract

Institutional changes have a significant impact on government capabilities and hierarchical relationships, especially in developing countries that characterized by governmental intervention for regional development. Using data from China's districts and counties from 1993 to 2022, this paper examines how administrative division adjustments, exemplified by the re-designation of counties as city districts, redefine the power and capability dynamics among bureaucratic entities. We find evidence that such redesignations widen regional disparities between transformed counties and other areas in four dimensions, including economic output, financial resources, fiscal capacity, and public services. We further identify three key mechanisms: reduce autonomy for former county governments, local government competition that leads to short-term efficacy, and resource siphoning from former counties to other regions. The effectiveness of the policy depends on changes in central policies, particularly on the trade-off between scale and incentives.

Suggested Citation

  • Jie, Yangyang & Zhang, Peikang & Shen, Tiyan, 2025. "Fade into the Shadows: Adjustments in Administrative Divisions and Regional Disparities," GLO Discussion Paper Series 1589, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1589
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    More about this item

    Keywords

    Regional disparity; Administrative division adjustment; Autonomy; Power structure;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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