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Does Governance Cause Growth? Evidence from China

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This study uses heterogeneous panel Granger causality tests to investigate the causal relationships between quality of governance and economic growth at the provincial level in China during the reform era. I find a significant and positive effect of economic growth on subsequent quality of governance, largely driven by growth in the secondary sector, but no significant effect of quality of governance on economic growth. These findings suggest that improvements in formal governance have not been a key factor in China’s rapid growth, and support the proposition that governance reforms are often a consequence, rather than a cause, of economic growth.

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  • Wilson, Ross, 2015. "Does Governance Cause Growth? Evidence from China," Working Papers 2015:14, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2015_014
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    Cited by:

    1. Mundle, Sudipto & Chowdhury, Samik & Sikdar, Satadru, 2016. "Governance Performance of Indian States 2001-02 and 2011-12," Working Papers 16/164, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Asia; China; Quality of Governance; Economic Growth;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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