| Since the 1980 s,China’s rapid economic growth over the past 40 years has been known as a “world miracle”.Local governments and officials have played a very important and active role.The system of fiscal and taxation decentralization and the performance appraisal system centered on GDP growth for officials have greatly aroused the enthusiasm of local officials to develop the local economy,which in turn has promoted the rapid economic growth of China in the past four decades.But at the same time,it has also triggered competition among local governments for tax revenue and GDP growth,which in turn gave birth to local protectionism and the market segmentation between administrative regions.Measured by border effects,interprovincial market segmentation in China is even more severe than that between EU countries.This not only hinders enterprises to expand outward in the form of crossregional trade or investment,but even forces enterprises to replace domestic trade with exports.Therefore,in the past,China’s economic growth has been more dependent on exports and foreign direct investment,while the domestic super-large market advantages and domestic demand potential have not been effectively tapped.However,in recent years,the rise of global trade protectionism and the global COVID-19 epidemic have brought huge uncertainties to China’s exports and foreign direct investment,and even affected the economic development of the entire country.In the face of domestic and foreign shocks,on April 10,2020,General Secretary Xi Jinping first pointed out that it is necessary to accelerate the formation of a new development pattern in which the domestic circulation is treated as a fundamental pillar and national and international circulation are promoted mutually.In this context,strengthening regional cooperation,eliminating local protection and breaking through regional market segmentation has become the premise and foundation for a smooth domestic circulation.Existing literature have reached a consensus on the existence of significant market segmentation among regions in China’s commodity market,but pays less attention to whether or not there is also regional segmentation in China’s capital market.In theory,local protectionism and the resulting regional market segmentation are rooted in excessive competition among local governments and officials.Strengthening intergovernmental coordination and cooperation will help break the regional market segmentation dominated by local governments,which then promote the cross-regional development of enterprises.In fact,the inter-regional movements of local officials can be considered as a low-cost method of regional cooperation and market integration,but its microeconomic effects have not well been quantified.In addition,the market and intermediary organizations exert their power in the promotion of inter-regional cooperation.As an important body of the market,the crossregional investment and trade of firm is an important microscopic form of the crossregional flow of commodities and capital,and its increase is conducive to the development of regional economic integration and the formation of a unified national market.As a social intermediary organization,the regional chamber of commerce(RCo C)can help coordinate the relationship between the government and firm.It is a bridge and link connecting the place of hometown origin and the place of operation,which has an inherent advantage in promoting inter-regional cooperation.Can the rotated officials and RCo Cs help firms break through the cross-regional development obstacles,and then promote them to expand outward in the form of cross-regional investment or trade? And what is the relationship between the them? Furthermore,what impact will this inter-regional flow of enterprises have on the regional industrial structure and economic growth?Compared with previous studies,this study has the following innovations:(1)Through more representative firm-level data from the State Administration for Industry and Commerce,this study directly and accurately identifies inter-city investments from2000 to 2017,and clearly calculates the integration degree of Chinese capital market and its changing trend from 2000 to 2017 through the border effect model.(2)Starting from firm’s cross-regional investment and trade behavior,this study examines the economic effects of rotated officials and RCo Cs,and provides a new path to reduce regional institutional segmentation and promote the cross-regional flow of commodity and product factors from the two aspects of capable government and powerful intermediary.This study initially established a research framework of capable government,powerful intermediary and efficient market.(3)This study empirically examines the causal relationship between the cross-regional trade and investment and RCo Cs.On the one hand,it further excavates the deep historical roots of this economic impact from the non-local chambers in Ming and Qing Dynasties.On the other hand,it investigates the contemporary practical reasons from the perspective of local officials.(4)From the micro-perspective of firm’s cross-regional investment,this study constructs a complete framework in which local officials promote cross-regional investment of firm,then affects industrial structure change and regional economic growth.This study adopts a research idea: first describe the facts,then construct a theoretical model and conduct empirical analysis,and finally provide policy recommendations.Firstly,this study uses the data of firm’ cross-regional investment and trade to visually display the inter-city investment network and domestic capital market segmentation based on Arc GIS(Chapter 3),and then proposes testable research hypotheses based on the heterogeneous enterprise trade and investment model(Chapter4).And then the above research hypotheses are systematically tested by standardized econometric analysis methods such as OLS,DID,and IV(Chapters 5 to 7).Corresponding policy recommendations finally are put forward based on the research conclusions(Chapter 8).The main contents are as follows:In Chapter 3,this study uses the State Administration for Industry and Commerce database from 2000 to 2017 to describe the process of domestic capital market segmentation through the border effect model.The study finds a significant interprovincial segmentation in China’s capital markets.The investment between adjacent cities within the same province is even about 3.7 times the investment between adjacent cities across the diffirent province.During this period,the domestic capital market showed a trend of integration,and the provincial border effect dropped from 3.7 in2000 to 2.5 in 2016.In addition,based on both the border effect and the relative price method,it is found that the integration degree of the domestic capital market is ahead of that of the commodity market.In Chapter 4,based on an extended firm trade and investment model,analyzes that the domestic market segmentation caused by excessive competition among local governments directly or indirectly increases the cost of trade or investment for nonlocal enterprises,which in turn hinders the cross-regional trade and investment of enterprises.In particular,the severe inter-provincial market segmentation makes the investment or trade of enterprises in cities within the province greater than that of enterprises cross the province.And as a way of coordination and cooperation between local governments,rotated officials help enterprises to cross-regionol trade or investment by weakening regional market segmentation and promoting the establishment of RCo Cs.In Chapter 5,using the inter-regional rotation of local leaders as a quasi-natural experiment to strengthen coordination and cooperation between local governments,this study finds that it significantly promotes the cross-regional investment of enterprises,especially the probability and number of enterprises to invest from the current place to the previous place increased more.And most of the increase in the number of investing enterprises is caused by the creation effect rather than the diversion effect.However,this positive effect becomes negative when the local protection is serious or the political incentives of officials are high.It is further found that,after the anti-corruption campaign in 2011,the transferred officials only can increase the investment of enterprises from the current place to the previous place,but not vice versa.Based on the inter-provincial trade data,this paper finds that when a local leader is appointed as the party secretary of a new province,the trade outflow from the current province to the previous province increased.In Chapter 6,the mechanism analysis finds that the cross-regional rotaions of local officials lower market segmentation,increases inter-provincial government and business exchanges,and promote the establishment of RCo Cs between provinces,which promote the cross-regional investment and trade between the current place and the original place.This study further finds that the formal social cooperation network established by the RCo Cs significantly promote firms’ cross-regional investment and trade.Further discussion finds that the RCo Cs can better promote the firms’ sales in the origin place where the marketization is lower,especially when the relationship between the government and the market in the origin is worse,and the RCo Cs play a more active role in it.In addition,the establishment of today’s RCo Cs has been deeply influenced by the RCo Cs in Ming and Qing Dynasties.In Chapter 7,this paper also finds that the inter-regional rotation of local officials has leaded to more similar industrial structure and narrowed the economic development gap between regions by promoting inter-region investment between the original and current places,which in turn have achieved the goal of coordinated regional development.Based on the personal characteristics data of officials,this paper finds that the inflow of companies from the original place significantly increases the probability of the transferred officials’ promotion,but does not increase the probability of being investigated for anti-corruption.In the appendix,using voluntary participation in the Yangtze River Delta Urban Economic Coordination Association as a quasi-natural experiment of bottom-up intergovernmental cooperation,this study finds that it can also help firms to cross-regional investment,especially there is more cross-regional investment between member cities who have RCo Cs.In addition,it is found that new regional cooperation methods such as city clusters and metropolitan area have significantly promoted cross-regional investment between member cities.In general,strengthening inter-regional government cooperation and establishing the RCo Cs will help break through domestic regional market segmentation and then promote Chinese enterprises to gain domestic market share through cross-regional investment and trade,thereby promoting domestic circulation.And it can also help Chinese exporters fully rely on the huge domestic market demand to cope with the negative impact of foreign demand.It will finally promote the formation of a new development pattern in which domestic cycles play a leading role and both domestic and international cycles interact each other,so as to achieve high-quality development of the Chinese economy.Based on the conclusions obtained,this study puts forward the following suggestions.Firstly,improve the performance appraisal system of local governments and officials,promote the large-scale and normalized cross-regional rotation of officials.Secondly,strengthen and standardize the construction of non-local chambers of commerce and industry association.Third,establish an institutionalized regional cooperation mechanism and improve the coordination of laws,policies and standards within the region.Forth,vigorously promote the market-oriented reform of factors and accelerate the construction of a unified national market.In addition,accelerate to construct major cross-regional infrastructure such as transportation and communications. |
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