Mandarins make markets: Leadership rotations and inter-provincial trade in China

• Main Authors: JIANG, Junyan, MEI, Yuan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Regional integration; Domestic trade; Leadership rotation in China; Asian Studies; Growth and Development; International Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/2436; https://ink.library.smu.edu.sg/context/soe_research/article/3435/viewcontent/Mandarins_make_markets_av.pdf
• Institution: Singapore Management University

The careers of many public officials span multiple localities, yet the economic effects of their inter-regional movements are not well understood. This paper focuses on the rotation of provincial leaders in China and studies its impact on regional economic integration. Estimation results using the gravity framework indicate that when a provincial leader is appointed as the party secretary of a new province, the trade volume from the new province to the old province increases, but not vice versa. Additional analyses using two novel datasets that capture the intensity of inter-provincial socioeconomic activities in China corroborate this finding. We then construct a quantitative trade model that incorporates input-output linkages and show that removing such inter-provincial links associated with the rotation of provincial leaders leads to an average welfare loss of 0.03%.