The Innovation Cost of Short Political Horizons: Evidence from Local Leaders’ Promotion in China

Abstract

I examine how politicians’ time horizons affect the choices between policies that yield short versus long-term growth. I digitize the career histories of Chinese city leaders and link them to economic policies and innovation outcomes. I exploit political connections formed through previous work ties to generate variation in leaders’ promotion expectations. I find that when leaders are connected, they can expect an earlier promotion. Such expectations lead them to pursue a fast-over-slow strategy for growth: higher spending on infrastructure, lower spending on science and technology, and a lower effort in promoting innovation. As a result, the local economy has higher short-term growth but lower future patenting and long-term growth.