Working Paper

This paper studies the impact of Government Industrial Guided Fund (GIGF) on local high-tech industrial clusters. Our findings suggest that GIGF contributes to an 8.7 percent growth of firm numbers in targeted industry-prefecture clusters within a five-year span post-implementation. We rule out the explanation that this economic benefit is driven by direct registration of firms involved in GIGF's efforts. Rather, this growth is driven by self-sustaining agglomeration dynamics: crowding in private equity investment, fostering local innovation ecosystems, and strengthening local supply chains. Critical for policymakers, a robust pre-GIGF industrial foundation and the limited involvement of government, emerge as key determinants of GIGF's success. Meanwhile, we evaluate the fiscal sustainability of GIGF. A tentative back-of-the-envelope calculation indicates a 15.9 percent annual rate of return through taxation.

This paper explores how changes in state capacity facilitates economic growth in an authoritarian system. This is the case of Deng Xiaoping’s systematic replacement of government officials with a new army of better-educated technocrats which uprooted Maoist revolutionary cadres. Our assumption is that post-Mao economic growth can be taken as a proxy for state capacity improvement. With a continuous treatment difference-in-differences strategy, this paper reveals that one percent increase in officials’ replacement intensity results in 1.3 percent increase in GDP in post-Mao China. Moreover, effects are robust across various technical concerns and maintain stable over a period of four decades. Furthermore, our results explain 18.05 percent of the contemporary economic disparity between China’s provinces (with intensity above and below the median). These effects can be associated with improvements in officials’ human capital which in turn rebuilt China’s fiscal capability, re-started a market-friendly industrialization, and resumed grassroots self-governing institutions. All these have been achieved without a regime change in the People’s Republic of China, hence, a ‘bloodless coup d’état’. 

Theoretically, when faced with an exogenous decline in promotion prospects, officials may respond in one of two opposing ways: increasing their involvement in corruption to compensate for political losses or reducing offering bribery (and therefore corruption), deeming them unnecessary. However, due to data limitations, previous studies have primarily concentrated on the regional impacts of a limited number of corrupt politicians, overlooking the granular analysis of individual-level corruption strategies among bureaucrats in various positions. This paper employs a fuzzy regression discontinuity design, leveraging age-cutoff norms for promotions and proprietary cadre-level corruption data, to empirically test these competing hypotheses. Our results demonstrate that officials with diminished promotion prospects are 19.6 percent more likely to engage in monetary corruption, thereby supporting the compensation hypothesis. These findings remain robust across various technical considerations. 

In economic history of China, there is a stigma attached to the traditional farming sector which has been commonly seen as the root course of technological backwardness, social inequality, mass poverty, class polarisation, social revolutions, and so forth. This study puts this stereotyped narrative to an acid test with reliable data from China’s first modern survey of the farming sector compiled by John Lossing Buck and his team. It re-examines the bona fide performance of China’s traditional agriculture in its ‘twilight stage’ before 1950. Thereafter, the Chinese Communists started radical programmes of collectivisation and state control over farming. Our results show that China’s traditional farming remained reasonable efficient in terms of agricultural productivity, farm wages and nutrition intake and certain growth potential remained for the sector. 

By leveraging China's Centralized Jurisdiction of Administrative Litigation (CJAL), this paper examines the adverse effects of strengthening property rights on economic development. Our findings indicate that CJAL increases plaintiffs’ winning probability against governments by 8.63%, particularly in land expropriation cases. Given the significance of land in the modern economy, this heightened challenge to expropriation has extensive impacts on economic outcomes. The CJAL reform reduces the land available for providing public goods, suppresses the service sector, decelerates the expansion of industrial parks, and hinders urbanization. Overall, this paper highlights the complex interplay between property rights and public interests.