Do Institutions Matter? Estimating the Effects of Institutions on Economic Performance in China

41 Pages Posted: 17 Jan 2007

See all articles by Ying Fang

Ying Fang

Xiamen University

Yang Zhao

University of Pittsburgh - Department of Economics

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

Fang, Ying and Zhao, Yang, Do Institutions Matter? Estimating the Effects of Institutions on Economic Performance in China (January 2007). Available at SSRN: https://ssrn.com/abstract=957719 or http://dx.doi.org/10.2139/ssrn.957719

Ying Fang (Contact Author)

Xiamen University ( email )

Xiamen
China

HOME PAGE: http://www.wise.xmu.edu.cn/homepage.asp

Yang Zhao

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

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