Political Institution and Long Run Economic Trajectory: Some Lessons from Two Millennia of Chinese Civilization

Debin Ma

No 8791, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Based on a reconstruction of a weighted index of political unification and a time series of incidences of warfare for the past two millennia, this paper develops a narrative to show that the establishment and consolidation towards a single unitary monopoly of political power in China was an endogenous historical process. Drawing on new institutional economics, this article develops a historical narrative to demonstrate that monopoly rule, a long time-horizon and the large size of the empire could give rise to a path of low-taxation and dynastic stability co-evolving with the growth of a private sector under China?s imperial system. But the fundamental problems of incentive misalignment and information asymmetry within its centralized and hierarchical political structure also placed limits to institutional change necessary for modern economic growth.

Keywords: Unification and fragmentation; Incentive and information; Political institution; Warfare (search for similar items in EconPapers)
JEL-codes: H50 N4 O11 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-his and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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