A rich literature has noted that electoral pressures in democracies engender political business cycles. We argue that in autocracies with strong institutions of bureaucratic management, evaluation systems based on economic performance have also generated political cycles for tax break policies. Furthermore, institutional forces have sequenced leaders' choices and produced distributional consequences across firms. Combining panel data of 1,510,153 firm-year observations with city leader data from 1995 to 2007, we find that the tax break amount dropped for most firms during the mayors' first year in office, as mayors needed to prioritize large firms and especially large foreign firms during the “busy year.” In contrast, small- and medium-sized private firms bore the cost of tenure cycles. In the last year of the mayor's tenure, i.e. the “dust-settled” year, tax cut offerings were significantly reduced for most firms, and even important firms could not gain the mayor's attention.
Download the event poster (PDF).
- Centre for Asian Legal Studies
- General Public