Government Promotion and Economic Investment: Green vs. Infrastructure

Published on Author kloster

A team of economists at Shanghai University recently published an assessment of the merit-based promotion system for Party and government officials.  The group looked at the effect of organization management on incentives for cadres to invest in transportation infrastructure (GDP boosting) or environmental improvements.

As pollution levels remain high, from air to water, what are the economic incentives or disincentives of going ‘green’ for Chinese officials?

The team, led by Jing Wu of Tsinghua U. observed that individuals were less likely to be promoted for improving the environment compared to economic investments in infrastructure (specifically roads and highways).

Table 7 in their report breaks down the promotion odds of a prefectural Mayor given a series of IV’s.  While several factors are shown to have a high probability of affecting the promotion of a mayor, two factors stand out the most.  Relative GDP Growth Rated compared with last officer in the same position and the average of ratio between environmental amenity investment and DGP during tenure.  Relative growth compared to previous Officers (5.29), Mayors are extremely more likely to be promoted if growth is higher (p < 0.01).  Conversely, those who invested more in environmental amenity over GDP growth (-2.11) were less likely to be promoted (p < 0.01).

As corruption undoubtedly continues to riddle the Chinese government, the negative externalities of its inaction and disincentives to protect the environment are beginning to affect not just the Chinese nation but surrounding areas where dense smog and poor water quality hamper living conditions.

One Response to Government Promotion and Economic Investment: Green vs. Infrastructure

  1. So underlying this, what is the presumed interest this reflects? If leaders were elected in a general vote, would they still favor growth over the environment? Remember too that pollution crosses political jurisdictions, you may not be able to do much about bad air if you’re downwind from an industrial region, while the costs that arise from dumping sewage into the local river are born by those downstream.