Invest to win: A study of "Local bias jumping" in China

IF 2.3 3区经济学 Q2 ECONOMICS

Journal of Economic Behavior & Organization Pub Date : 2025-06-30 DOI:10.1016/j.jebo.2025.107127

Jidong Li , Cheng Yuan , Zhichun Huang

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引用次数: 0

Abstract

We document a paradoxically positive relationship between the strong preference of local governments for local business and domestic capital inflow in China. Confronted by barriers posed by the bias of local governments towards local suppliers in procurement markets, firms strategically move through capital markets via investments. We call this phenomenon "local bias jumping" (LBJ). Using comprehensive datasets of procurement winners and losers, we find that the probability of local firms winning contracts is 1.44 times that of nonlocal firms. Furthermore, investing in local subsidiaries appears to provide a significant advantage in procurement competitions. Nonlocal firms with investments one to three years prior to bidding are 1.5 times more likely to win contracts than those without such investments. LBJ-driven investments flow from developed to less developed regions, promoting interregional capital mobility. Our findings underscore the dual impact of local bias in China's investment landscape, revealing its complex effects on economic development.

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投资赢：中国“地方偏见跳跃”研究

我们记录了中国地方政府对本地企业的强烈偏好与国内资本流入之间矛盾的正相关关系。面对地方政府在采购市场上对本地供应商的偏见所造成的障碍，企业通过投资战略性地在资本市场上移动。我们称这种现象为“局部偏置跳变”（LBJ）。利用采购赢家和输家的综合数据集，我们发现本地企业赢得合同的概率是非本地企业的1.44倍。此外，投资当地子公司似乎在采购竞争中具有重大优势。在投标前一至三年进行投资的非本地公司赢得合同的可能性是没有此类投资的公司的1.5倍。lbj驱动的投资从发达地区流向欠发达地区，促进了区域间的资本流动。我们的研究结果强调了中国投资环境中地方偏见的双重影响，揭示了其对经济发展的复杂影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Economic Behavior & Organization ECONOMICS-

CiteScore

3.80

自引率

9.10%

发文量

392

期刊介绍： The Journal of Economic Behavior and Organization is devoted to theoretical and empirical research concerning economic decision, organization and behavior and to economic change in all its aspects. Its specific purposes are to foster an improved understanding of how human cognitive, computational and informational characteristics influence the working of economic organizations and market economies and how an economy structural features lead to various types of micro and macro behavior, to changing patterns of development and to institutional evolution. Research with these purposes that explore the interrelations of economics with other disciplines such as biology, psychology, law, anthropology, sociology and mathematics is particularly welcome.