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Changing Incentives of the Chinese Bureaucracy

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  • David D. Li

Abstract

It has been increasingly recognized that the Chinese goverm-nent's newly acquired enthusiasm for economic development is a major factor explaining the relative success of China's transition from socialism. This paper argues that the changed behavior of the Chinese government is an outcome of a series of reforms of the bureaucracy. The bureaucracy was transformed from inside through a massive mandatory retirement program and a drive for administrative/fiscal decentralization. It was also changed from outside since many bureaucrats can quit government positions and join businesses. China's unique approach to reform bureaucracy without explicit political liberalization is predetermined by its initial conditions of transition.

Suggested Citation

  • David D. Li, 1998. "Changing Incentives of the Chinese Bureaucracy," William Davidson Institute Working Papers Series 130, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1998-130
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39520/3/wp130.pdf
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    Cited by:

    1. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    2. Kobil Ruziev & Don Webber, 2017. "SMEs access to formal finance in post-communist economies: Do institutional structure and political connectedness matter?," Working Papers 20171701, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    3. Cull, Robert & Xu, Lixin Colin & Yang, Xi & Zhou, Li-An & Zhu, Tian, 2017. "Market facilitation by local government and firm efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 460-480.
    4. Alexander Ljungqvist & Donghua Chen & Dequan Jiang & Haitian Lu & Mingming Zhou, 2015. "State Capitalism vs. Private Enterprise," NBER Working Papers 20930, National Bureau of Economic Research, Inc.
    5. Polterovich, Victor, 2000. "Civic Culture and Economic Transition in Russia," MPRA Paper 20068, University Library of Munich, Germany.
    6. Tang, Tanya & Firth, Michael, 2011. "Can book-tax differences capture earnings management and tax Management? Empirical evidence from China," The International Journal of Accounting, Elsevier, vol. 46(2), pages 175-204, June.
    7. Kenneth Koford, 2000. "Citizen Restraints on “Leviathan” Government: Transition Politics in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 30-62.
    8. Wilson, Ross, 2016. "Does Governance Cause Growth? Evidence from China," World Development, Elsevier, vol. 79(C), pages 138-151.
    9. He, Guanming, 2016. "Fiscal Support and Earnings Management," The International Journal of Accounting, Elsevier, vol. 51(1), pages 57-84.
    10. Polterovich, Victor, 2001. "Трансплантация Экономических Институтов
      [Transplantation of Economic Institutions]
      ," MPRA Paper 22034, University Library of Munich, Germany.
    11. Lizal, Lubomir & Kocenda, Evzen, 2001. "State of corruption in transition: case of the Czech Republic," Emerging Markets Review, Elsevier, pages 138-160.
    12. Hu, Yifan & OPPER, Sonja & Wong, Sonia M.L., 2006. "Political economy of labor retrenchment: Evidence based on China's state-owned enterprises," China Economic Review, Elsevier, vol. 17(3), pages 281-299.
    13. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
    14. Leung, Charles Ka Yui & Chow, Kenneth & Yiu, Matthew & Tam, Dickson, 2010. "House Market in Chinese Cities: Dynamic Modeling, In-Sampling Fitting and Out-of-Sample Forecasting," MPRA Paper 27367, University Library of Munich, Germany.
    15. Koford, Kenneth, 2000. "Citizen restraints on "Leviathan" government: transition politics in Bulgaria," European Journal of Political Economy, Elsevier, vol. 16(2), pages 307-338, June.
    16. Maggie Xiaoyang Chen, 2013. "The Matching Of Heterogeneous Firms And Politicians," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1502-1522, April.
    17. Polterovich, Victor, 2005. "Общество Перманентного Перераспределения: Роль Реформ
      [Permanent Redistribution Society: The Role of Reforms]
      ," MPRA Paper 22526, University Library of Munich, Germany.
    18. EL KAROUNI, Ilyess, 2008. "ORIGINES et consolidation du changement institutionnel : le cas chinois
      [ORIGINS and Strengthening of Institutional Change: the Chinese Case]
      ," MPRA Paper 8714, University Library of Munich, Germany.
    19. Trien Le & Trevor Buck, 2011. "State ownership and listed firm performance: a universally negative governance relationship?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(2), pages 227-248, May.
    20. Полтерович В.М., 2006. "Стратегии Институциональных Реформ. Китай И Россия," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 42(2), апрель.
    21. Qin, Zhong, 2011. "Models of trust-sharing in Chinese private enterprises," Economic Modelling, Elsevier, vol. 28(3), pages 1017-1029, May.
    22. Wilson, Ross, 2015. "Does Governance Cause Growth? Evidence from China," Working Papers 2015:14, Lund University, Department of Economics.
    23. Maria Csanadi, 2001. "A Model Explaining Social and Political Change of Party-states Structural and Dynamic Background of Similarities and Differences in Reproduction, reforms, Collapse and Transformation," IEHAS Discussion Papers 0101, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    24. Polterovich, Victor, 2008. "Современное Состояние Теории Экономических Реформ
      [Modern Condition of the Theory of Economic Reforms]
      ," MPRA Paper 22032, University Library of Munich, Germany.

    More about this item

    Keywords

    reform of the bureaucracy; bereaucratic behvior; government in transition;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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