Governance capacity, related variety and regional economic resilience under the COVID-19 epidemic: evidence from China

The outbreak of COVID-19 epidemic had a prolonged impact on urban economic activities. Cities with better economic resilience are more capable of resisting the shock brought by the epidemic and realizing post-epidemic economic recovery. In such an uncertain environment, both governance capability and local industrial varieties have significant impacts on economic resilience. On the basis of previous works from evolutionary economic geography and institutional studies, this study uses nighttime light intensity as a proxy for economic resilience at prefecture-level. Our findings indicate that, at least in the short term, the effect of governance capacity on economic resilience is moderated by local industry varieties. Hence, the local government may enhance economic resilience via innovation, economic development and urban governance channels, but it should follow the risk transmission mechanism of the regional industrial network. In addition, taking into account the institutional basis of China’s central-local relation, local governance capacity was compressed in the prevention and control of epidemic, mitigating its function on the long-term economic recovery.