Legacy of War: The Long-Term Effect of Taiping Rebellion on Economic Development in Modern China

Abstract

In this paper we investigate the impact of Taiping Rebellion in the mid-nineteenth century on later economic development in China. We use a unique prefecture-level dataset on containing civil war intensity to assess whether the war damage led to persistent economic effect. We compare the heavily damaged prefectures to other prefectures controlling for pre-war demographic and geographic characteristics, and use an instrumental variable approach exploiting distance to Tianjing, capital of the Taiping Heavenly Kingdom. Our findings indicate that Taiping Rebellion has negative impacts on population density, but positive effect on industrialization and urbanization through change in endowment, human capital, and official stricture. These findings also shed light on the origin of industrialization and urbanization in Modern China.

Keywords: Taiping Rebellion, Economic Development, Modern China, Civil War

JEL Classification: J10, N45, N95, R11