Political incentives, transformation efficiency and resource-exhausted cities

Since 2003, the evaluation system of government officials in China has undergone significant changes from relying on almost solely on traditional economic growth criteria to a broader set of indicators including environmental quality and per-capita disposable income of urban residents. Resource exhausted cities face severe problems, such as environmental pollution and industrial restructuring, during this process of city transformation. While addressing these problems, local officials, especially local top leaders, play a very important role, because their performance under this new evaluation system, to a certain extent, impacts the transformation efficiency of resource-exhausted cities. Based on this, we analyze the relationship between political incentives and city transformation efficiency by applying a panel dataset of 37 resource-exhausted cities from the 2004-2014. The findings reveal that: (1) transformation efficiency has been improved noticeably over the final two years of the sample period following 8 years of fluctuation without meaningful improvement. (2) Of the factors which impact the transformation efficiency of resource-exhausted cities, foreign direct investment, fiscal deficit and number of internet users produce only weak effects. This indicates that investment openness, fiscal surplus of local government, and infrastructure construction are not key variables in boosting urban transformation. (3) The impact of political incentives on the transformation efficiency of resource exhausted cities depends on whether the officials are municipal party secretaries or mayors. The results confirm that the existing authority structure in China has an effect on the transformation of resource-exhausted cities and imply that, in contrast to the municipal party secretaries, the mayors take a subordinate position in the authority structure, thus failing to exert their effective role in the process of urban transformation. (C) 2018 Elsevier Ltd. All rights reserved.