Abstract
AbstractThis paper examines why China, in spite of its ordinary institutions, can grow so rapidly and for so long. Since each region in China has different quality of institutions and growth rates, we look into provincial and city data for this investigation. The variables formal and informal institutions are added into the conventional cross‐section growth equation. The quality of the formal (informal) institution is taken from an opinion survey on the effectiveness of city governance conducted by the World Bank in 2006 (can be measured by the share of township‐and‐village enterprise in each province during 1978–2002 or by the trust index from surveys). We conclude that it is the informal institution that drives the rapid growth in China. Further investigation, using panel data and Arellano‐Bond system GMM estimator, which controls for the missing fixed effect in cross‐provincial regressions and provides useful instrument, confirms.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
