Culture Based Development in the Regions of China

Abstract

Is culture a relevant factor for the development of the Chinese regions and is this culture different from the institutional settings of China? The Culture Based Development (CBD) paradigm has been collecting evidence from the Western world about the impact of local cultural capital (a quantitative expression of culture) on the productivity of places throughout the EU and United States. The current article aims to replicate the CBD approach for the first time for the institutional setting of China. It does so by using a unique panel dataset for Chinese provinces over a seven-year period (2013–2019), which contains over sixty cultural indicators and employing factor analysis, 3SLS, and k-mean clustering estimation techniques. The main contribution of the article is the distinction that it draws conceptually and empirically between culture as a proto institution and the rest of the institutional settings in a country. Revealing part of the differences and the interaction between culture and institutions, this study sheds light on many important, still-unanswered-in-the-economic-literature questions about culture and local development in China.