Resource dependence, market-oriented reform, and industrial transformation: Empirical evidence from Chinese cities

Industrial transformation is the key to urban transformation. Despite extensive studies on the topic of resource curse, limited studies have analyzed the impact of resource dependence on industrial transformation, especially taking into account the role of institutional quality. This paper attempts to fill such research gap. Based on a panel dataset of 283 China's cities, this paper analyzes the effect of resource dependence on industrial transformation under the background of China's market-oriented reform by using multiple econometric models. We find that resource dependence is indeed an important factor that causes the industrial structure to be dominated by secondary industry, indicating that resource dependence has a lock-in effect on industrial transformation. Besides, we also confirm that resource dependence has a non-linear impact on the industrial structure under different marketization levels, and China's market-oriented reform can alleviate the lock-in effect to some extent. Based on these findings, we propose that local governments should pay attention to the regulatory role of market-oriented reform in industrial transformation.