A Model of Chinese Central Government: The Role of Reciprocal Accountability

Abstract

Why was the same state in China able to promote economic growth in the reform era but not in the previous thirty years? In this paper we focus on a specific aspect that might help the search for a comprehensive explanation: the specific institutional arrangement that induced autocratic government to adopt growth-enhancing policies. To this aim, we consider a standard political agency model (Besley, 2006) where the incumbent leader may be either congruent or not, and where both types need the support of the ‘selectorate’ to hold on to power. Our main result is that in autocracies without electoral discipline, to restrain the opportunistic behavior of a leader, the size of the ‘selectorate ’should be intermediate: if too small, the ‘selectorate ’is captured by the leader and has no disciplinary role; if too big, the leader’s incentives are diluted.

Keywords: accountability, selectorate, political agency, Chinese economic reform

JEL Classification: D02, H11, D74