The higher-ranking local officials and local economic growth: Evidence from China

Abstract

This paper investigates the effect of administrative level on local economic growth from the perspective of officials' rank. We notice an interesting phenomenon that higher-ranking local officials (HRO) serve in cities with lower administrative level, can effectively improve economic performance similar to the effect of promoting administrative level of local government. Based on prefecture-level city data from 2001 to 2019, we find that HRO can significantly promote local economic growth, especially in cities with lower levels of development. The mechanism analysis shows that the HRO cities not only could receive upper-level government's favoritism but also tend to shape good business environment to attract investment. Further, HRO is a softer and shorter way than a formal change of regional administrative level, with less negative impact on the surrounding regions. The results provide new evidence that raising administrative level promotes regional development.