Does External Environmental Uncertainty Encourage Policy Diffusion? Evidence from Chinese Administrative Approval Reform

Although policy diffusion theory highlights that adopting a new policy can enable local governments’ capability to cope with external environmental uncertainty, empirical evidence regarding the effect of external environmental uncertainty on policy diffusion remains limited. To fill this gap, I construct a textual-based, provincial-level economic policy uncertainty (PEPU) index and employ a machine learning-based event history analysis model (EHA) to examine the effect of PEPU on the diffusion of administrative approval reform among Chinese local governments. The findings reveal that heightened external environmental uncertainty increases local governments’ likelihood of enacting administrative approval reforms. Furthermore, local governments that share political ties to higher authorities are more likely to adopt administrative approval reform in response to uncertainty.