UC Berkeley

This dissertation contains three chapters that examine development and urbanization in China since 1980. The first chapter investigates the impact of Special Economic Zones established since 1992 on local economic outcomes and urbanization rates. The second chapter studies local bureaucrats’ incentives while balancing the goals of economic growth and resource or environmental protection. The last chapter examines patterns of urbanization in China as related to the administrative hierarchy between urban and rural regions.

In the first chapter, I examine the local and aggregate productivity impacts of Chinas Special Economic Zones (SEZ) program from the 1990s to 2006. Using an event study de- sign where I exploit variation in the timing of the first zone establishment across counties, I find that an SEZ increased GDP by 1% to 2% per year over 5 years. In order to assess the aggregate impact of the program, I develop a spatial equilibrium model with two sectors – agriculture and manufacturing. In the model, the economy-wide output impact of an SEZ depends on the elasticities of inter-regional and inter-sectoral labor supply, as well as the relative productivity levels of the SEZ-hosting regions and other regions. I do not find any evidence that the SEZ program induced inter-regional labor reallocation. However, the program did accelerate the shift of employment from the agricultural sector.

In the second chapter, I explore whether Chinese bureaucrats’ policy decisions depend on connections with their superiors through the appointment of bureaucrats to office. In particular, I consider appointment as a kind act on the part of the promoter, and ask whether the promoted bureaucrat enacts policies that are in the interest of his benefactor. This framework is applied to the policy outcome of rural land conversion and air pollution. I examine whether rural land conversion is more prevalent, and whether air pollution is more abundant, when the local bureaucrat works under the Party Secretary who promoted him. My analysis exploits variation in the length of politicians terms within individual and pairs of politicians. Preliminary findings suggest that promoted land bureaucrats may exhibit reciprocal behavior, while environmental protection bureaucrats may not.

In the last chapter, I study the impact on urbanization of the Cities Leading Counties (CLC) policy implemented in China beginning in 1983. This nationwide program granted large metropolitan governments administrative control over counties in the surrounding

hinterland. I use annual county-level nighttime lights data to examine changes in urbanization in the hinterland after integration with a city. I find that while the policy increased urbanization in counties subsumed into cities, the cities themselves did not experience faster urbanization.