Economic growth target management and the quality of economic development: evidences from China

ABSTRACT

By analyzing the data of Chinese industrial firms, we explore the association between governments’ economic growth target management behaviour and the quality of local economic development. We find that the rise of economic growth pressure can decrease the total factor productivity (TFP) of local enterprises and has a negative impact on the quality of local economic development. Besides, the effect of economic growth pressure on local firms’ productivity is more pronounced when firm is stated owned, when firm is located in cities with newly appointed officials, during the period of Communist Party of China National Congress (CPCNC), but would be attenuated if municipal party secretary has achieved a Ph.D. degree. Further mechanism analysis verifies that higher economic growth pressure could demolish the TFP of enterprises by distorting marginal revenue productivity of capital ($MRPK$).

KEYWORDS:

• Economic growth target
• TFP
• Heterogeneity
• MRPK

JEL CLASSIFICATION:

• D24
• E65
• O12
• O21

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Public Data source: https://gitee.com/arlionn/IRE