The Needham Puzzle Reconsidered: The Protection of Industrial and Commercial Property Rights

Qiang Chen

Economic History of Developing Regions, 2012, vol. 27, issue 1, 38-66

Abstract: Various non-institutional hypotheses are insufficient to account for the Needham Puzzle, i.e. why the Industrial Revolution did not originate in China. This paper proposes that the fundamental cause of the Needham Puzzle is the weak protection of industrial and commercial property rights (ICPR) in historical China. Through a simple model, technological progress is shown to depend on the protection of ICPR, and evidence is provided to show China's weak protection of ICPR, demonstrated by a high real tax rate and its unpredictability, arbitrariness and progressiveness. The ICPR hypothesis helps explain why the Song Dynasty's early industrial revolution did not continue, and the peculiar de-urbanisation trend in the subsequent Ming and Qing dynasties.

Date: 2012
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DOI: 10.1080/20780389.2012.682379

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