How Does Turnover Distort Resource Allocation? Evidence from China’s Public Procurement

61 Pages Posted: 29 Oct 2022

See all articles by Ziwen Zu

Ziwen Zu

University of California, San Diego

Date Written: October 26, 2022

Abstract

Scholarship has generally treated leadership turnover in authoritarian regimes as a meritocratic bureaucracy that deters favoritism. This study advances an alternative view that emphasizes the adverse effects of turnover. I argue that political turnover generates political uncertainty and career incentives for politicians to allocate public spending to familiar firms, producing what I call turnover-based favoritism. The claim is based on how mayoral turnovers affect procurement allocation in China. Using an original public procurement data set spanning 2013 to 2020, I show that mayors increase purchases from firms located in the cities where they were previously in government. These findings highlight the importance of political turnover in public goods distribution and government business relations.

Keywords: political turnover, public procurement, distributive favoritism, political uncertainty, career incentives

Suggested Citation

Zu, Ziwen, How Does Turnover Distort Resource Allocation? Evidence from China’s Public Procurement (October 26, 2022). Available at SSRN: https://ssrn.com/abstract=4259352 or http://dx.doi.org/10.2139/ssrn.4259352

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