Stimulated political decisions

Local leadership turnover and firm subsidies in China

Bibliographic Data

ID6341908
AuthorsYue Hou (0000-0002-9514-9152, University of Pennsylvania, corresponding author), Siyao Li (0000-0002-1278-2375, University of Pittsburgh, corresponding author)
Year2023
Volume11
Issue1
Pages18-33
Publication date2023-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenuePolitical Science Research and Methods (JOURNAL)
Journal identifiersISSN: 2049-8470 • E-ISSN: 2049-8489
PublisherCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/psrm.2022.52
OpenAlexW4308453942
LanguageEN
Citations received8
References cited47

How do politicians distribute government resources in regimes with no electoral considerations? We propose that new politicians minimize political risks by favoring politically important actors: state-owned enterprises (SOEs), but they adjust their behavior as they establish personal ties with private businesses. Using firm-level subsidies data after the 2008 stimulus in China, we find that new provincial governors, immediately after taking office, distribute a significantly larger proportion of subsidies to SOEs relative to private firms. The effect attenuates as new governors learn about local conditions and establish connections with private firms. We find suggestive evidence that governors who adopt such a strategy are more likely to be promoted. Contrary to conventional wisdom that the state always favors state-owned firms, we show that SOEs benefit from the stimulus packageonlyin the short-run

Business · China · Economics · Market economy · Political science · Politics · Stimulus (psychology · Subsidy · Electoral Systems and Political Participation · Local Government Finance and Decentralization · Political Influence and Corporate Strategies