An Almost Laboratory Experiment: John Cowperthwaite and Hong Kong's Economic Prosperity

49 Pages Posted: 2 Mar 2023 Last revised: 10 Apr 2023

See all articles by Vincent Geloso

Vincent Geloso

George Mason University - Department of Economics

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics

Yang Zhou

University of North Texas - Department of Economics

Date Written: February 26, 2023

Abstract

Milton Friedman, in the 1960s, was convinced that the British government official in charge of Hong Kong's economic policy — John Cowperthwaite — was largely responsible for running the most radical experiment in economic history. Cowperthwaite, a classical liberal enrolled in the British civil service, aggressively resisted attempts to intervene in Hong Kong's economic policy as he believed that free markets fueled growth. Because of factors inherent to British domestic politics and the nature of colonial rule in Hong Kong, Cowperthwaite's views and personality made him a singularly influential figure. In this paper, we use the synthetic control method to test whether Cowperthwaite really did constrain Hong Kong's government and whether his policies fueled economic growth. We find evidence that he did constrain the growth of government but there were no visible effects on growth. We tie these results to the role of Hong Kong's land policies and how it impacts the meaningfulness of the size of government results.

Keywords: Economic Growth; Milton Friedman; John Cowperthwaite; Hong Kong; Size of Government

JEL Classification: O13, N11, N51

Suggested Citation

Geloso, Vincent and Bologna Pavlik, Jamie and Zhou, Yang, An Almost Laboratory Experiment: John Cowperthwaite and Hong Kong's Economic Prosperity (February 26, 2023). GMU Working Paper in Economics No. 23-15, Available at SSRN: https://ssrn.com/abstract=4371395 or http://dx.doi.org/10.2139/ssrn.4371395

Vincent Geloso (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Suite 167, 2625 Memorial Circle
TTU Administration
Lubbock, TX 79409
United States

Yang Zhou

University of North Texas - Department of Economics ( email )

1155 Union Circle #311457
Denton, TX Texas 76203-5017
United States

HOME PAGE: http://economics.unt.edu/people/yang-zhou

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