Association for Public Policy Analysis & Management

This paper places emphasis on the influence of local governments’ infrastructural construction investment on their regional economic development in China. In order to maintain political stability, China sets up its goal for national annual economic growth. The central government distributes the goal to local governments of different hierarchies. This situation is mainly caused by "the pressure system", which only values economic growth. For winning peer competitions, local governments’ principal officials devote their efforts to the achievement of economy-related targets. In contrast to consumption and net export, investment, especially government investment can help achieve economic targets in a short term.

We analyze 6143 infrastructural projects’ information from Chengdu city’s municipal and 5 county level governments, finding that the directivity of investment between superior and subordinate governments varies from that among governments of corresponding level. The municipal government has to supervise county governments, and urge their cooperation over regionalism. Thus, it undertakes more duty on implementing infrastructure projects which involve more than one county. Among counties, the difference lies in orientations of development due to different development stages. Counties in the core area of the city face insufficiency of land supply after going through their first step of urbanization, and their orientations incline to social services. On the other hand, those which surround the inner city tend to reinforce economic construction and two sub modes derive: to start a new round of urbanization revolving around land resources as participants of urban expansion; to exploit characteristic consumer industry as geographically remote members.