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Why Do Entrepreneurs Enter Politics? Evidence from China

Hongbin Li (), Lingsheng Meng and Junsen Zhang

Economic Inquiry, 2006, vol. 44, issue 3, 559-578

Abstract: This article examines the determinants of the entrepreneur's political participation by employing a unique matched firm-institution data set from China. We find that the likelihood of an entrepreneur's participation can be explained by the underdevelopment of markets and market-supporting institutions. According to our estimates, the probability of entering politics decreases by 8--20% from the mean when the institutional indices improve by one standard deviation. Our findings support the view that the institutional environment shapes the private entrepreneur's motivation to participate in politics; they also provide an example of how private entrepreneurs respond to state/market failure in developing and transition countries. (JEL G1, H00, O10, P2, P3) Copyright 2006, Oxford University Press.

JEL-codes: G1 H00 O10 P2 P3 (search for similar items in EconPapers)
Date: 2006
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Handle: RePEc:oup:ecinqu:v:44:y:2006:i:3:p:559-578