BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 9/2009:
Do institutions matter? Estimating the effect of institutions on economic performance in China
Fang Ying ()
and Zhao Yang ()
Abstract: This paper estimates the effect of institutions on
economic performance using cross-city data from China. We argue that
China's ongoing reforms are part of a long and circuitous historical
transition from antiquity to modernity, which started about 150 years ago.
Learning from Western countries has been a central aspect of this
historical process. The West had a laThis paper estimates the effect of
institutions on economic performance using cross-city data from China. We
argue that China's ongoing reforms are part of a long and circuitous
historical transition from antiquity to modernity, which started about 150
years ago. Learning from Western countries has been a central aspect of
this historical process. The West had a large influence on the early stage
of this transition, which has persisted to current reforms. This study uses
the enrollment in Christian missionary lower primary schools in China in
1919 as an instrument for present institutions. Employing a two-stage least
squares method, we find that the effect of institutions on economic
performance in China is positive and significant. The results are robust
according to various tests including additional controls, such as
geographic factors and government policy-related variables.
Keywords: institutions; christian; geography; policy; (follow links to similar papers)
JEL-Codes: O11; O53; P16; P51; (follow links to similar papers)
36 pages, July 6, 2009
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