Does local government tax competition promote industrial transformation and upgrading

Promoting industrial transformation and upgrading is the vital and main
driving force for realizing high-quality economic development. The paper
related to this dataset systematically interprets the theoretical
mechanism of local government tax competition and industrial
transformation and upgrading from the theoretical level, based on which,
through the fixed effect model, we test the impact of local government tax
competition on industrial transformation and upgrading, the transmission
mechanism, and the moderating effect played by technological innovation.
The study finds that: (1) There exists an inverted “U-shaped” relationship
between local government tax competition and industrial transformation and
upgrading, which is driven by incentives and then constrained by
competition and is tested by a series of robustness tests; (2)
Heterogeneity analysis shows that the inverted “U-shaped” relationship
between local government tax competition and industrial transformation and
upgrading is more evident in cities with no economic growth targets,
cities in the eastern region, economically developed cities, and cities
with weak tax officials; (3) Mechanism test shows that local government
tax competition mainly contributes to industrial transformation and
upgrading by adjusting the tax structure, reducing the inequality of
income distribution and strengthening the level of industrial
agglomeration; (4) Technological innovation positively moderates the
inverted “U-shaped” relationship between local government tax competition
and industrial transformation and upgrading, and makes the inverted “U”
curve steeper and the inverted “U-shaped” relationship more pronounced.
The study helps to identify the impact of local government tax competition
on industrial transformation and upgrading. The study helps to identify
the specific effect of local government tax competition on industrial
transformation and upgrading. It can provide theoretical support and
decision-making reference for optimizing local tax policies and promoting
high-quality economic development.