Anticorruption and Growth: Evidence from China

38 Pages Posted: 26 Jun 2016

See all articles by Guangjun Qu

Guangjun Qu

Birmingham-Southern College

Kevin Sylwester

Southern Illinois University - Carbondale - Department of Economics

Feng Wang

Chongqing University

Date Written: March 2, 2016

Abstract

Many studies have examined corruption’s effect upon economic growth. This study takes a different approach and investigates whether anticorruption campaigns might also lower economic growth, at least in the short run. We focus upon the anticorruption campaigns run by the Communist Party of China in recent years. To measure the intensity of the Party’s anticorruption efforts, we count the number of articles from official newspapers that discuss corruption or anticorruption policies. These official Chinese newspapers are controlled by the Party as its mouthpieces and the inclusion of articles and editorials in these papers only appear with official approval. Therefore, the frequency of corruption and anticorruption articles within these papers provides information for how seriously the Party views corruption and how strenuously the Party is fighting it. We first analyze the patterns of the anticorruption campaigns across provinces and over time while also comparing our measure with other measures of corruption and anticorruption. Using data from Chinese provinces, we then estimate the effect of anticorruption upon economic growth. We employ fixed effects models and find a negative effect from anticorruption upon economic growth. Concerned that economic growth could impact the intensity of anticorruption campaigns, we utilize dynamic GMM estimation methodologies and also propose an external instrument for our anticorruption proxy. Results remained robust. Finally, we measure the effects of anticorruption not by our newspaper proxies but by looking at growth effects during and after the sentencing of high ranking government officials on corruption charges. Economic growth is once again found to be lower. Moreover, this negative effect appears to last for two years. Our findings do not imply that governments should not try to lower corruption, but do suggest a cost of doing so.

Keywords: Anticorruption; Official Newspapers; China; Corruption; Growth

JEL Classification: K42, O11, H11

Suggested Citation

Qu, Guangjun and Sylwester, Kevin and Wang, Feng, Anticorruption and Growth: Evidence from China (March 2, 2016). Available at SSRN: https://ssrn.com/abstract=2799932 or http://dx.doi.org/10.2139/ssrn.2799932

Guangjun Qu (Contact Author)

Birmingham-Southern College ( email )

Birmingam, AL 35254
United States
205-226-7746 (Phone)
205-226-3080 (Fax)

Kevin Sylwester

Southern Illinois University - Carbondale - Department of Economics ( email )

Mailcode 4515
Carbondale, IL 62901
United States
618-453-5347 (Phone)
618-453-3253 (Fax)

Feng Wang

Chongqing University ( email )

Shazheng Str 174, Shapingba District
Shazheng street, Shapingba district
Chongqing 400044, Chongqing 400030
China

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