A new historical narrative for “Needham Puzzle” and the modern Chinese growth miracle: The perspective of keju

Xiangyu Shi

Economics Letters, 2025, vol. 255, issue C

Abstract: Why was China not the origin of the Industrial Revolution, but instead rose from imperial dynasties and experienced a growth miracle in the past four decades? We find that China’s imperial examination system (keju) plays a critical role in explaining the fall and rise of historical and modern/contemporary China. We find that keju significantly facilitates contemporary innovation and business creation by raising the contemporaneous level of human capital, shaping an innovative and productive culture, and fostering efficient institutions. In historical periods, keju misallocated top talents away from the scientific/technological sectors, leading to sluggish development during the Ming and Qing dynasties.

Keywords: Imperial examination system; Human capital; Culture; Institution; Innovation; Business creation; China (search for similar items in EconPapers)
JEL-codes: D22 E24 J24 N35 O31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525003659

DOI: 10.1016/j.econlet.2025.112528

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