| One of the biggest economic achievements of China over the past thirty years is the enhancing economic strength. There are many researchers and scholars who have been trying to explain the economic miracle in China. Represented by Zhou Li Ann, scholars analyzed and discovered that the local government, especially local officials, plays a vital role in the process of booming China’s economy. The local officials’ initiative and enthusiasm to economic growth is rare even in the world. Among the three main factors driving China’s economy, investment is the fastest and most effective way, which has the ability to boom entities’ economy in a relatively short time. In the process of regional economic development, the enterprises, acting as the subjects of modern micro economy, are under the direct control of local government. Thus their investment is the main means to boost local economy.On the basis of previous research, this paper first built a simple theoretical model to explain that the existence of official promotion competition tend to expand investment in order to gain the maximization of his utilities, then empirically analyzed the impact of local politician’s turnover on enterprises’ investment within the jurisdiction. This paper collected local politicians’ turnover data in 360 local cities and districts in 31 provinces and municipalities from 1999 to 2009 and matched it with China Industrial Enterprise Database into panel data. The regression result estimated that local governor’s turnover has significant negative effect on enterprise investment spending in the year. We divided whole sample into SOE and non-SOE sub sample, Eastern and non-eastern sub sample. The sub sample results were consistent with whole sample. Moreover, this paper investigated local governor’s change that lags for one period has significantly promoted enterprises investment. Further, this paper discussed official heterogeneity on enterprise investment in turnover year, the result showed that education level has significant positive effect, age showed negative but not significant and governor’s local dummy variable showed negative effect. Finally, this paper discussed influence of official’s turnover on investment efficiency, and found official’s turnover has significant negative impact on efficiency.Overall, the turnover of secretary of city municipal party committee has significant internal connection with enterprise investment, which has negative effect on enterprises’ current year investment and investment efficiency, and positive influence on next year’s investment. To some extent, the change of official can stimulate local economy, but also can lead to policy instability and hamper long-term development of enterprises. To this point, the frequency of official turnover should be within a reasonable range to maintain the stability of official team. |
