Government fragmentation and economic growth in China’s cities

This study examines the effect of metropolitan government fragmentation on urban economic growth in China. Spatially decentralised governance under centralised political control plays an important role in China’s post-reform economic development, although evidence has focused on the growth-inducing effect of political completion at the provincial and cross-city levels. Our study suggests that economic growth increases with the number of urban districts only up to two districts, controlling for the potential endogeneity in the number of urban districts, the proxy of metropolitan government fragmentation. This result, while suggestive and in need of further validation, has important policy implications for the rapid urbanisation in China, where municipal administrative structure design does not seem to factor in the effects of government fragmentation on urban growth. More broadly, evidence from China’s cities contributes to the ongoing evaluation of fragmented metropolitan governance across the world.