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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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    File URL: http://project.nek.lu.se/publications/workpap/papers/wp15_14.pdf
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    Paper provided by Lund University, Department of Economics in its series Working Papers with number 2015:14.

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    Length: 40 pages
    Date of creation: 30 Apr 2015
    Handle: RePEc:hhs:lunewp:2015_014
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    Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden

    Phone: +46 +46 222 0000
    Fax: +46 +46 2224613
    Web page: http://www.nek.lu.se/en

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