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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

    as
    1. 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.
    2. Turchin, Peter, 2009. "A theory for formation of large empires," Journal of Global History, Cambridge University Press, vol. 4(02), pages 191-217, July.
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    Cited by:

    1. repec:eee:exehis:v:64:y:2017:i:c:p:1-20 is not listed on IDEAS
    2. Ko, Chiu Yu & Koyama, Mark & Sng, Tuan-Hwee, 2014. "Unified China; Divided Europe," MPRA Paper 60418, University Library of Munich, Germany.
    3. 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.
    4. 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.
    5. 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.
    6. Ko, Chiu Yu & Koyama, Mark & Sng, Tuan-Hwee, 2014. "Unified China and Divided Europe," CEI Working Paper Series 2014-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    incentive and information; political institution; unification and fragmentation; warfare;

    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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