When State-Building Hinders Growth: The Legacy of China's Confucian Bureaucracy

Abstract

Do countries with a long history of state-building fare better in the long run? Recent work has shown that earlier state-building may lead to higher levels of present-day growth. By contrast, I use a natural experiment to show that the regions of China with over a thousand years of sustained exposure to state-building are significantly poorer today. The mechanism of persistence, I argue, was the introduction of a civil service exam based on knowledge of Confucian classics, which strengthened the social prestige of the civil service and weakened the prestige of commerce. A thousand years later, the regions of China where the Confucian bureaucracy was first introduced have a more educated population and more Confucian temples, but lower levels of wealth. The paper contributes to an important debate on the Great Divergence, highlighting how political institutions interact with culture to cause long-run patterns of growth.

Keywords: state building, culture, growth, bureaucracies, institutions