and immune to the influence of local governments, and the central government should complement GDP statistics with objective measures such as those based on night lights and other sources of nonmanipulatable data. Third, while there are likely positive effects from tournament competition among regional governments in China, as the literature has demonstrated, and the target-setting practices consistent with the ratchet principle tend to limit the extent of GDP manipulation, as we show here, our results suggest that we should also consider the negative side of tournament competition among local governments. Moreover, as we document that peer competition could make performance manipulation increase over time due to peers-reinforcement, even if the tournament competition design begins as a beneficial system for motivating bureaucrats, the dynamics of tournament competition could make adverse effects of performance manipulation rise over time. Thus, if we are to preserve the benefits of tournament competition, it is crucial to make performance non-manipulatable. All these implications are recognized by top business leaders. Legendary former Intel CEO, Andrew Groves, emphasizes the notion of paired statistics for management, such as pairing the number of deals closed with the retention rate of clients.<sup>49</sup> It appears that bureaucrat management could benefit from similar management disciplines, such as by pairing GDP growth with indicators of adverse effects of singleminded growth such as pollution and inequality.

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> 49 See the blog of Chin (2019): <u>Beware What You Measure: The Principle of Pairing Indicators (holistics.io).</u>

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