Administrative approval reform and the quality of economic development

Abstract

Can administrative approval reform become an effective reform to improve the quality of economic development? Total factor productivity is the key measure of the quality of economic development. In this paper, we studied the influence of administrative approval reform on total factor productivity of enterprises theoretically and empirically. We found that administrative approval reform has promoted the improvement of the total factor productivity of enterprises overall. The reduction of institutional transaction costs and the increase in the threat of enterprise entry are important mechanisms for administrative approval reform to affect enterprise productivity. In addition, the decomposition results of the overall productivity growth of cities show that administrative approval reform mainly promotes the growth of total factor productivity of incumbent enterprises.