The Political Resource Blessing or Curse? Patronage Networks, Infrastructure Investment, and Economic Development in China

Forthcoming in Comparative Political Studies

82 Pages Posted: 14 Apr 2020 Last revised: 29 Aug 2022

See all articles by Zhenhuan Lei

Zhenhuan Lei

University of Wisconsin - Madison - La Follette School of Public Affairs; University of Wisconsin - Madison - Department of Political Science

Date Written: August 25, 2022

Abstract

Does the patron-client connection between local governments and their superiors improve or hurt the local economic development? Although recent research suggests that patron-client connections boost local economic performance, this paper investigates the potential costs and risks of connection-driven economic development. With a difference-in-differences design applied to Chinese prefecture-level cities, I find that politically connected cities were more likely to win their superior's support to obtain the projects approved by the four-trillion-Yuan stimulus enacted in 2008 and increased the city's public investment in infrastructure. Meanwhile, these politically connected cities accumulated more public debts than other unconnected cities. Furthermore, those cities that lacked such political connections were more likely to promote private investment by introducing business-friendly policies. These results show that patron-client connections make an economic development model that features government investment and public debts more possible than the one that depends on vibrant entrepreneurship and private investment.

Keywords: China, Corruption and Patronage, Economic Policy, Intergovernmental Relations, Political Economy

Suggested Citation

Lei, Zhenhuan, The Political Resource Blessing or Curse? Patronage Networks, Infrastructure Investment, and Economic Development in China (August 25, 2022). Forthcoming in Comparative Political Studies, Available at SSRN: https://ssrn.com/abstract=3556948 or http://dx.doi.org/10.2139/ssrn.3556948

Zhenhuan Lei (Contact Author)

University of Wisconsin - Madison - La Follette School of Public Affairs ( email )

1225 Observatory Drive
Madison, WI 53705
United States

University of Wisconsin - Madison - Department of Political Science ( email )

Madison, WI
United States

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