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Does the Investment Approval System Reform Promote Investment? Evidence from the Reform of the Central GovernmentInvestment Approval System in 2004

【Authors】
WANG Xianbin & HUANG Liangxiong
【WorkUnit】
WANG Xianbin (Jinan University, 510632)HUANG Liangxiong (South China University of Technology, 510006)
【Abstract】

China's economy has shifted from high-speed growth to a new stage of high-quality development, and there is an urgent need to reshape the investment momentum for economic growth. This paper studies this from the perspective of investment control adjustment. This paper takes the reform of the central government investment approval system in 2004 as the natural experiment, and uses the differences-in-differences method and the DDD method to empirically study the investment effect of investment control relaxation. We find that the reform of the investment approval system has relaxed investment control and thus promoted the expansion of investment in related industries and sectors. The effect is more obvious in smaller enterprises which receive less government subsidies, and in regions with relatively low degree of regional marketization and relatively low efficiency of local governments, which indirectly shows that deregulation reduces the space for local governments and officials to intervene and control enterprise investment. This paper also finds that the reform of investment approval system can improve investment efficiency. The findings verify the positive economic effects of deregulation and provide feasible policy ideas for further deepening economic restructuring.

 

JEL:H11,E22,D22

【KeyWords】
Investment Approval System Reform, Investment Growth, Difference-in-Differences Method