CENTRAL PLANNING LEGACIES: THE LINGERING EFFECTS OF THE GREAT LEAP FORWARD IN CHINA

Qichun He and Meng Sun

Bulletin of Economic Research, 2016, vol. 68, issue 2, 182-203

Abstract: type="main">

The Great Leap Forward (GLF) (1958–61) in China was a natural experiment that removed private property rights to achieve rapid growth via central planning, producing immediate famine and death. Using three measures for the GLF, we find that it still exerts a significant negative effect on output per worker in 2004 across Chinese provinces. This result is robust to the use of political factors from the GLF period as instruments. The causal relationship persists after controlling for climate conditions and initial output per capita. Moreover, the causal relationship exists when we change the dependent variable to output per worker in 1978, which refutes the notion that market-oriented reforms alone explain the difference in income in 2004. Therefore, the GLF has had a lasting, negative effect on output.

Date: 2016
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