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

36 Pages Posted: 8 Jul 2009 Last revised: 18 Nov 2009

Date Written: July 2, 2009

Abstract

This paper estimates the effect of institutions on economic performance using cross-city data from China. We argue that China's ongoing reforms are part of a long and circuitous historical transition from antiquity to modernity, which started about 150 years ago. Learning from Western countries has been a central aspect of this historical process. The West had a laThis paper estimates the effect of institutions on economic performance using cross-city data from China. We argue that China's ongoing reforms are part of a long and circuitous historical transition from antiquity to modernity, which started about 150 years ago. Learning from Western countries has been a central aspect of this historical process. The West had a large influence on the early stage of this transition, which has persisted to current reforms. This study uses the enrollment in Christian missionary lower primary schools in China in 1919 as an instrument for present institutions. Employing a two-stage least squares method, we find that the effect of institutions on economic performance in China is positive and significant. The results are robust according to various tests including additional controls, such as geographic factors and government policy-related variables.

Keywords: institutions, christian, geography, policy

JEL Classification: O11, O53, P16, P51

Suggested Citation

Fang, Ying, Do Institutions Matter? Estimating the Effect of Institutions on Economic Performance in China (July 2, 2009). BOFIT Discussion Paper No. 9/2009, Available at SSRN: https://ssrn.com/abstract=1430330 or http://dx.doi.org/10.2139/ssrn.1430330

Ying Fang (Contact Author)

Xiamen University ( email )

Xiamen
China

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

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