A Study On Economic Behavioral Patterns Of Local Governments And Economic Growth

Since reform and opening up, the source of Chinese economic miracle is regional government directly intervening economy. The dissertation studies influence of economic behavioral patterns of local government on economic growth based on behavioral cause-effect chain which consists of objective environment, intentions and motivations of action subjects, act itself and the consequences’of actions. In the process of marketization, enthusiasm and initiative of local government developing economy is from fiscal incentive and political promotion incentive. It is discussed that collective official benefit predilection of local government is pursuit of extra-budgetary revenue and key officials pursue political promotions is motived and restricted by economic growth as main performance assessment index. Regarding it as logic starting point, relationship between interest predilection of local governments and economic growth has been explored by empirical analysis which shows that extra-budgetary revenue dominated by retained profit of enterprise significantly improves economic growth which restrains expansion of extra-budgetary revenue on the contrary before tax allocation reform, and that extra-budgetary revenue dominated by income of land transfer and economic growth facilitate each other after tax allocation reform. The results show that political promotion incentives based on economic growth is dominant in diversified motivation preference of officials of local government in two periods of before and after tax allocation reform. Economic behavioral patterns characterized by market segmentation and land development respectively have been concluded before and after tax allocation reform.On this basis, the source and foundation of sustainable economic growth comes down to total factor productivity, industry structure and business performance, the dissertation further studies influence of economic behavioral patterns on sustainable economic growth in the aspects of three levels from macroscopic to microscopic views.(1) The result in the study on TFP found that economic behavioral behaviors have negative effect on TFP in different periods, government investment has threshold effect in model of regression of economic behavior on TFP growth, the formation of economic behavioral model needs government investment. Further structural decomposition of TFP reveals that impacts of economic behavioral models in two periods on TFP are significant different. The impact of Market segmentation on TFP presents U-shaped relation mainly from the relationship between economic behavior and technical efficiency, which has little influence on technical progress. In comparison, behavioral pattern of land operation after reform of tax allocation has negative influence on TFP, the negative effect is not convergence but further exacerbate, due to land operation ever worsening technical efficiency to entirely counteract the effects of slightly positive influence to technical progress.(2) The influence of economic behavioral patterns of local government on industry stucture show that local government’s behavior of market segmentation intensify regional industrial isomorphism which is exacerbated by segmentation and trade barrier of adjacent provinces before the reform of tax allocation. Taking spatial factor into account, local market segmentation facilitates industrial specialization, while segmentations of adjacent provinces significantly restrict industrial specialization development of local region. After the reform of tax allocation, Although local government behavior of land development has negative as a whole, adjacent provinces behavior of land development accelerate local industrial specialization development.(3) In the view of data availability, influence of land development on enterprise performance was mainly analyzed. The results show that local governments’ behavior of land development significantly restrict firms’ performance after controlling for other factors to affect the enterprises’ performance. Moreover, behavior of land development does harm the firms of good performance more than the bad firms, and the behavior greatly weakens sustainable development abilities of industrial firms. Further study on different types of firms shows that it has more negative influence on coastal enterprises, non state-owned enterprises and technology-intensive enterprise than counterparts. Local governmental investment builds the pattern of land development which has positive and negative two kinds of effects. Apart from the effect of infrastructure construction, firm performance is restricted by government investment which has more negative effect on firms with the worst and the best performance.It is indicated in the dissertation that economic behavior of local government has brought serious side effects to sustainable economic development while it gives a significant boost to economic growth. Local governments play a great role in resource allocation at the early stage of marketization. The decisive role of market resources allocation will gradually highlight with the development and perfection of market system. In any case, effectively productive local governments are the important resources and advantages for China stepping cross middle income trap and catching up with the developed countries. At the late stage of marketization, firstly, incentive mechanisms of local governments must be optimized. In the light of foundation of institution which promotion incentive outweigh fiscal incentive is administrative system that is vertical expansion of local autonomy and horizontal centralization of power, performance appraisal evaluation system, in particular, must be perfected at present to break up inertia and path dependence of long-term development. It is the basis of economic transition and upgrade. Secondly, the market intervention of local government is restricted by expansion of reasonable autonomy of enterprises and cultivation of intermediatary organization that is transferred by many types of economic function to realization of indirect regulation and control of local government. Thirdly, the anomie actions of investment must be corrected, impulse investing of commercial quality is eliminated to weaken foundation of self-interested behavior pattern. Fourthly, through introducing the supervision from bottom up, the lack of regulation from the central government is effectively made up for.