In the Name of Love: Policy Imitation, Political Incentives, and Local Economic Growth

Policy experimentations are widely accepted instruments for promoting economic growth in many countries. However, the effects may be undermined if they’re masked by top-down enforcement that ignores local conditions. Using satellite night light data, we investigate the economic impacts of the “Taobao Villages (TBVs)” program in China, a bottom-up pilot on rural e-commerce that is imitated nationwide under top-down directives. Exploiting the difference-in-differences approach, we show that the establishment of TBVs significantly reduces townships’ night light and therefore local economic growth. We further reveal that the top-down directives in TBVs’ establishment and the strategic behaviors of local officials motivated by political incentives are the potential driving forces.