Government-business Relationship,Market Segmentation And High-quality Economic Development

The reform of the tax-sharing system has created conditions for local protectionism,and the official promotion mechanism has provided incentives for local governments to adopt local protectionism.The consequences of local protectionism are disordered competition and market segmentation.This kind of non-integrated domestic market hinders the improvement of total factor productivity,a measure of economic development.Officials’ characteristics can reflect the intimate degree of government-business relationship,which affects the degree of local protectionism.Based on this,this paper measures the inter-provincial market segmentation from profit deviation on the supply side,and use the inter-provincial balanced panel data of China from 1999 to 2017 to test the relationship among government-business relationship,market segmentation and high quality economic development empirically.The results show that the close government-business relationship intensifies domestic market segmentation,limits the liquidity of elements,and then inhibits the high-quality development of China’s economy.The effects also have significant periodic characteristics and spatial heterogeneity.The periodic changes of government-business relationship alters the regression coefficient and significance level of market segmentation.The difference of government-business relationship and market segmentation between the eastern and the midwestern regions is finally reflected in the impact on economic growth quality.The conclusions have practical significance for establishing "close but clear" government-business relationship,integrating the national market and improving the quality of economic growth.