The Effect Of Official Change On Urban Economic Efficiency

Since the central government abolished the tenure system for cadres in 1982,official changes have become the norm.The "Official promotion Championship" system with Chinese characteristics gives local government officials who concerned about careers strong incentives,which is one of the important reasons for China's rapid economic growth in the past few decades.However,it should be noted that under the current promotion system in our country,officials generally have short tenures and change frequently.Although this promotion system gives officials a strong incentive to promote economic growth,such a short term will make officials become shortsighted.They will maximize the short-term benefits,resulting in rapid short-term economic growth but low economic efficiency.Thus,this paper studies the impact of official changes on urban economic efficiency from the perspective of behavior characteristics of officials to prompt policy makers to build a stable official appointment and removal mechanism and improve the official performance evaluation system.This paper explores the impact of official changes in China on the urban economic efficiency by combining the theory of official change with the theory of urban economic efficiency.To begin with,this paper sorts out the theories of official changes and urban economics respectively,then builds a theoretical model and analyzes impact ways and mechanism.The following theoretical assumptions are proposed:(i)the official changes have a negative impact on urban economic efficiency.(ii)the changes of officials have a heterogeneous effect on urban economic efficiency.(iii)the change of officials will affect the economic efficiency of the city through three ways: bank credit,land transfer and enterprise rent-seeking expenses.Then,this paper analyzes the current situation of official change and urban economic efficiency in China,making a conclusion that there is a negative correlation between them.Subsequently,this paper uses DEA method to calculate the economic efficiency of 282 cities from 2007 to 2017,and empirically tests the impact of official change on urban economic efficiency.Also,the samples are grouped according to the degree of political promotion incentives,rent-seeking incentives,and regional characteristics to examine whether the impact of official changes on urban economic efficiency is heterogeneous.Further,this paper examines the main influence paths.Finally,this paper explores the influence of the transformation of performance evaluation system on the relationship between the change of officials and urban economic efficiency.The main conclusions are as follows:(i)Official changes have a negative impact on urban economic efficiency,and this effect is heterogeneous.Specifically,the higher the degree of political promotion incentive and power rent incentive are,the greater the negative impact of official changes on urban economic efficiency.Also,the effects of official changes in coastal areas on urban economic efficiency are more obvious than in inland areas.(ii)The change of officials will affect the urban economic efficiency through direct and indirect ways.In terms of direct ways,changes of officials will reduce urban economic efficiency by reducing credit allocation efficiency,land resource allocation efficiency and increasing corporate rent-seeking expenses;in terms of indirect ways,changes of officials will lead to economic policy uncertainty,thereby reducing the local enterprise's Investment efficiency and the scale of foreign investment,which reduce urban economic efficiency.(iii)The transformation of performance evaluation system is conducive to curbing the trend of local officials' short-term behavior,thereby reducing the negative impact of changes of officials on urban economic efficiency.The conclusion of this paper provides guidance for the reform of the personnel system of officials in China.First,improve the official evaluation mechanism and attach importance to economic development efficiency indicators.Second,build a stable official appointment and removal mechanism,and appropriately extend the term of local officials,controlling frequency of official changes within a reasonable range.Third,establish a life-long accountability mechanism for policy effects to prevent local government officials from harvesting short-term benefits from policy implementation without bearing long-term costs.Fourth,reform the government's administrative examination and approval system,implement the system of government power list and market negative list,thus reduce the space for local governments to set rents.Fifth,establish a strict inspection mechanism,enhance the transparency of official power,and weaken the incentives for official power rent.Sixth,build a perfect market-oriented allocation system of production factors and weaken the discretion of local governments over local resources.Seventh,standardize the behavior of enterprises and increase penalties for corporate rent-seeking behaviors.The main contribution of this paper is to broaden the research perspective on the impact of official changes on urban economic efficiency.The existing literature studies the impact of official changes on urban economic efficiency mainly based on the promotion motivation of officials.This paper proposes that officials have both the attributes of "political person" and "economic person".They are not only facing incentives of political promotion,but also incentives of power rent.These two types of incentives affect the behavior of new officials,which make them have negative impacts on local economic efficiency.By constructing a theoretical model and conducting empirical tests,this paper proves the influence of these two incentives on the relationship between official changes and urban economic efficiency.In addition,this paper also examines whether the negative impact of official changes on urban economic efficiency will diminish after the transformation of official evaluation system.At present,there is little literature to explore the impact of the transformation of official evaluation system on economic efficiency.