Is China a Leviathan?

Ze Zhu and Barbara Krug

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: To address the problem why China, as a communist country, moves in the opposite direction when the public sector has undergoing a continuous growth in most Western economies since the World War I, we offer a new approach that the de facto fiscal decentralization curtails government size in transition China according to Leviathan theory. Meanwhile, by combining time series and cross-section regression analysis and various variables used by previous empirical studies, this paper tests the Leviathan hypothesis for vertical decentralization, horizontal fragmentation and intergovernmental collusion at national and provincial level, respectively, based on the new data set of China. Our empirical results not only explain Chinese shrinking government size, but also lend support to Leviathan hypothesis, especially, under the condition of absence of traditional democratic electoral constraint.

Keywords: China; Leviathan; fiscal decentralization; transition economy (search for similar items in EconPapers)
JEL-codes: E62 M M14 (search for similar items in EconPapers)
Date: 2005-05-10
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Citations: View citations in EconPapers (5)

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