Do Institutions Matter? Estimating the Effects of Institutions on Economic Performance in China
41 Pages Posted: 17 Jan 2007
Date Written: January 2007
Abstract
This paper estimates the effects of institutions on economic performance with the cross-city data of China. We argue that China's ongoing reform belongs to the long historical transition from antiquity to modern society, which started one and half centuries ago. Learning from Western countries is a central aspect of this historical process. The influence by the West at the early stage of this transition has persisted into current reform. We use the enrollment in Christian missionary lower primary schools in China in 1919 as the instrument for present institutions. Employing the two-stage least squares method, we find that the effect of institutions on economic performance in China is positive and significant. The result survives various robustness tests with additional controls, such as geographic factors and government policy related variables.
Keywords: Institutions, China, Christian, Geography, Policy
JEL Classification: O11, O53, P16, P51
Suggested Citation: Suggested Citation
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