As a vital link in China’s five-level government structure, the county level bridges urban and rural areas, and plays a pivotal role in the central-local relations. Under the new normal, the county-level economy confronts greater volatility risks due to its low technological innovation capability. The transformation of the county-level economy is a new engine for China’ s regional economic development. It not only affects the county itself, but also entails the restructuring of a larger competitive landscape. There are many disputes in theory and practice about whether the reform of City-County Merge can facilitate the transformation of the county-level economy. The microlevel of economic transformation is the transformation and upgrading of enterprises. Based on the data of Chinese industrial enterprises, this paper takes the innovation performance of county enterprises as the entry point, and adopts an augmented DID model for empirical testing. The results indicate that the innovation performance of county enterprises is significantly impaired after the reform of City-County Merge, and the negative effect of the reform exhibits a U-shaped trend. The entry rate of county enterprises plays a mediating role in the effect of the reform of City-County Merge on curbing innovation performance, while subsidies and tax preference play a masking role. Heterogeneity analysis reveals that the negative effect of the reform of City-County Merge on the innovation performance of county enterprises is mainly manifested in enterprises in non-ordinary cities, enterprises in highly-competitive industries, enterprises in non-digital industries, small-scale enterprises, and growth-stage enterprises. The policy implication of this paper is that after the reform of City-County Merge, the new jurisdiction government should scientifically guide external enterprises to enter, reinforce the government’s financial support and accuracy during the transformation period, and augment the industrial relevance and complementarity between cities and counties, so as to achieve complementary advantages and dislocation development.
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Journal of Shanghai University of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
GuoChanglin YanJinqiang WangWenbin WuWenfang, Vice Editor-in-Chief
How does City-County Merge Affect Transformation of the County-level Economy: From the Perspective of Corporate Innovation Performance
Journal of Shanghai University of Finance and Economics Vol. 26, Issue 04, pp. 77 - 91 (2024) DOI:10.16538/j.cnki.jsufe.2024.04.006
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Ni Tingting, Wang Yuetang, Zhu Minjie. How does City-County Merge Affect Transformation of the County-level Economy: From the Perspective of Corporate Innovation Performance[J]. Journal of Shanghai University of Finance and Economics, 2024, 26(4): 77-91.
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