Political economy of private firms in China

Di Guo, Kun Jiang, Byung-Yeon Kim and Chenggang Xu

Journal of Comparative Economics, 2014, vol. 42, issue 2, 286-303

Abstract: The sweeping change in political economy associated with the rapid growth of the private sector in China is rarely studied empirically in the economics literature. Using four cross-sectional surveys of private firms between 1995 and 2010, we examine the dynamics of rent creation from Party membership and other political connections when the regime changed from anti-capitalistic to pro-capitalistic during the period 2002–2004. We find that entrepreneurs with political connection enjoyed significantly more rents only after the constitutional amendments. This finding sheds lights on the nature of the political economy of today’s Chinese economy. Endogeneity/causality problems are addressed.

Keywords: Party membership; China; Political connections; Private firms (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 P48 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:42:y:2014:i:2:p:286-303

DOI: 10.1016/j.jce.2014.03.006

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