Abstract
Abstract
Whether and how the City Cluster Program (CCP) in China changes the public expenditure strategy for FDI. To answer this question, we propose an identifying mechanism on NEG theory and spatial econometrics, allowing us to overcome the unavailability of the disaggregate data of public fiscal expenditures. We find that members adjust from a competitive to cooperative expenditure strategy for FDI by reducing egoistic expenditure and increasing altruistic expenditure after the CCP. The spatial spillovers and decomposition between and within different subsamples confirm that the CCP alleviates the competition for FDI, and low-ranking members in the city hierarchy prefer competitive strategies for FDI in the pre-CCP period and make more adjustments to cooperative strategies in the post-CCP period.
JEL Classification: R58, H73, F23
Publisher
Research Square Platform LLC
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