The Deep Determinants of Economic Development in China: A Provincial Perspective

Linda Glawe and Helmut Wagner

No 12/2018, CEAMeS Discussion Paper Series from University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS)

Abstract: There is a significant body of literature arguing that institutional quality is the key for long run economic growth and development. While the majority of these studies are based on cross-country growth regression, in our paper, we focus on the institution-economic growth nexus within a particular country, namely China. China is often regarded as an exception by having achieved miraculous growth for more than three decades despite relatively low institutional quality. Nonetheless, our key findings suggest that at the provincial level, institutional quality played in fact an important role for the economic success of a province in China, even more important than geographical factors and integration. However, when simultaneously examining the relationship between institutions, human capital, and provincial economic development, we find that human capital ``trumps'' everything else; however institutional quality has a highly significant indirect effect on provincial per capita income by improving human capital. We employ instrumental variable estimation techniques to address the endogeneity problems regarding the institutions-development and human capital-development relationship.

Keywords: economic growth and development; deep determinants of economic growth; institutional quality; human capital; the Chinese economy (search for similar items in EconPapers)
JEL-codes: O11 O43 O53 (search for similar items in EconPapers)
Date: 2018, Revised 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The deep determinants of economic development in China—a provincial perspective (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ceames:122018

DOI: 10.18445/20190124-112938-0

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