The Political Economy of Big Data

• In Event: Tax Enforcement, VATs, and Information Exchange

Abstract

We explore the impact of China’s Golden Tax System (GTS) III, a nationwide big data initiative launched between 2013 and 2016, on reducing regional GDP manipulation. By integrating diverse data sources into a unified system, big data adoption enhances governmental oversight and reduces information asymmetry. In examining prefecture-level data in a difference-in-differences empirical design, we find that GTS III lowers the likelihood of regional governments marginally meeting or exceeding GDP growth targets. Further analysis suggests that lower information asymmetry and larger investment in big data infrastructure are two potential mechanisms explaining this effect. Additionally, we find that reliance on GDP metrics for local politician promotion evaluation subsides post-adoption. Collectively, this evidence underscores big data’s transformative potential in improving government transparency, accountability, and decision-making processes.

Author

• Jing Huang, Virginia Tech