Local government competition and resource allocation efficiency

Abstract

This study confirms that local government competition is an important influencing factor on resource allocation efficiency. The results indicate that local government competition can inspire local governments to better serve local businesses and residents, improve administrative efficiency, reduce unnecessary administrative barriers, and encourage the government to allocate resources more efficiently. Moreover, the heterogeneity analysis results show that the promotion effect of local government competition on resource allocation is more pronounced in areas with lower marketization and in private enterprises. Overall, the results of this study indirectly confirm that building a "proactive government" can optimize the resource allocation efficiency.