Fiscal decentralization, intergovernmental mobility, and the innovativeness of local governments' policy response in COVID‐19: Evidence from China

Abstract

Abstract Policy innovation is an essential approach for local governments to deal with external challenges, which is also the case in response to the COVID‐19 pandemic. This article discusses the effects of fiscal decentralization and leaders' intergovernmental mobility on the innovativeness of local governments in pandemic response. By investigating the economic relief policy of local governments in China, we find that both fiscal decentralization and local leaders' intergovernmental mobility in their previous careers facilitate the innovativeness of local governments' economic relief policy for pandemic recovery, and the business experience of local leaders enhances the positive influence of fiscal decentralization on the innovativeness of local policy. The results indicate that fiscal decentralization and the intergovernmental connection based on leaders' political mobility are likely to be two predominant factors for local governments to enable horizontal mutual learning and central‐local policy coordination, and as a result foster policy innovativeness in response to the pandemic.