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Political Institution and Long Run Economic Trajectory: Some Lessons from Two Millennia of Chinese Civilization

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  • Ma, Debin

Abstract

Based on a reconstruction of a weighted index of political unification and a time series of incidences of warfare for the past two millennia, this paper develops a narrative to show that the establishment and consolidation towards a single unitary monopoly of political power in China was an endogenous historical process. Drawing on new institutional economics, this article develops a historical narrative to demonstrate that monopoly rule, a long time-horizon and the large size of the empire could give rise to a path of low-taxation and dynastic stability co-evolving with the growth of a private sector under China?s imperial system. But the fundamental problems of incentive misalignment and information asymmetry within its centralized and hierarchical political structure also placed limits to institutional change necessary for modern economic growth.

Suggested Citation

  • Ma, Debin, 2012. "Political Institution and Long Run Economic Trajectory: Some Lessons from Two Millennia of Chinese Civilization," CEPR Discussion Papers 8791, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8791
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    References listed on IDEAS

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    1. Turchin, Peter, 2009. "A theory for formation of large empires," Journal of Global History, Cambridge University Press, vol. 4(2), pages 191-217, July.
    2. Debin Ma, 2004. "Growth, institutions and knowledge: a review and reflection on the historiography of 18th–20th century China," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 44(3), pages 259-277, November.
    3. North,Douglass C. & Wallis,John Joseph & Weingast,Barry R., 2013. "Violence and Social Orders," Cambridge Books, Cambridge University Press, number 9781107646995, January.
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    Citations

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    Cited by:

    1. Johnson, Noel D. & Koyama, Mark, 2017. "States and economic growth: Capacity and constraints," Explorations in Economic History, Elsevier, vol. 64(C), pages 1-20.
    2. Ko, Chiu Yu & Koyama, Mark & Sng, Tuan-Hwee, 2014. "Unified China; Divided Europe," MPRA Paper 60418, University Library of Munich, Germany.
    3. Jared Rubin & Debin Ma, 2017. "The Paradox of Power: Understanding Fiscal Capacity in Imperial China and Absolutist Regimes," Working Papers 17-02, Chapman University, Economic Science Institute.
    4. Shuo Chen & Debin Ma, 2022. "States and wars: China’s long march towards unity and its consequences, 221 BC – 1911 AD," Oxford Economic and Social History Working Papers _199, University of Oxford, Department of Economics.
    5. Masahiko Aoki, 2013. "Historical sources of institutional trajectories in economic development: China, Japan and Korea compared," Chapters, in: Comparative Institutional Analysis, chapter 22, pages 439-469, Edward Elgar Publishing.
    6. Ma, Debin & Chen, Shuo, 2020. "States and Wars: China’s Long March towards Unity and its Consequences, 221 BC – 1911 AD," CEPR Discussion Papers 15187, C.E.P.R. Discussion Papers.
    7. Chiu Yu Ko & Mark Koyama & Tuan†Hwee Sng, 2018. "Unified China And Divided Europe," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(1), pages 285-327, February.
    8. Qiang Chen, 2014. "Natural Disasters, Ethnic Diversity, and the Size of Nations: Two Thousand Years of Unification and Division in Historical China," SDU Working Papers 2014-01, School of Economics, Shandong University.
    9. Loren Brandt & Debin Ma & Thomas G. Rawski, 2014. "From Divergence to Convergence: Reevaluating the History behind China's Economic Boom," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 45-123, March.
    10. Ma, Debin & Rubin, Jared, 2019. "The Paradox of Power: Principal-agent problems and administrative capacity in Imperial China (and other absolutist regimes)," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 277-294.
    11. Ma, Debin, 2021. "Ideology and the Contours of Economic Changes in Modern China during 1850-1950," CEPR Discussion Papers 15835, C.E.P.R. Discussion Papers.
    12. Shuo, Chen & Ma, Debin, 2020. "States and Wars: China’s Long March towards Unity and its Consequences, 221 BC – 1911 AD," CAGE Online Working Paper Series 505, Competitive Advantage in the Global Economy (CAGE).
    13. Rui Wang & Qianmao Zhu & Matthew Noellert, 2024. "Weak central government, strong legal rights: the origins of divergent legal institutions in 18th-century Chinese and Japanese rice markets," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

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    More about this item

    Keywords

    Unification and fragmentation; Incentive and information; Political institution; Warfare;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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