Last mile in anti-poverty drive: Impact of cadres’ appraisals on growth and poverty reduction

Abstract

Developing countries need deft strategies to implement policies such as poverty alleviation especially when central and local governments face a misalignment of objectives. We explore this issue with China’s anti-poverty drive under President Xi Jinping using county-level data from 2012 to 2018 and a fixed effects model to investigate the impacts of a switch in cadres’ performance appraisal to focus on eradicating poverty instead of economic growth. Our study shows that the appraisal change slows GDP growth but lifts rural income among the poorest as resources are reallocated to projects that improve their livelihoods. Heterogeneity analyses further indicate that the GDP impact from the appraisal shift is mainly ascribed to counties that entirely remove GDP-related indicators, and not so much to those that merely reduce the weightage. Furthermore, using data such as fiscal gap and sectoral added value, we explore mechanisms through which the performance appraisal shift affects GDP growth. The experience of China shows that political incentives in a centralized system can facilitate the implementation of equity-targeted public policies, but this efficiency is not cost-free as economic growth might be compromised. Therefore, our study serves as a reference for other developing countries that wish to explore the pathway of applying public governance in poverty alleviation.