BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 17/2009:
China as a regulatory state
Julan Du ()
and Zhigang Tao
Abstract: Market economy models differ in the degree of the power of
the government vis-ā-vis the market in the economy. Under the classications
set forth by Glaeser and Shleifer (2002, 2003), and Djankov et al. (2003),
these market models range from those emphasizing low government
intervention in the market (private orderings and private litigation
through courts) to those where the state is an active participant
(regulatory state). This paper, using data from a survey of 3,073 private
enterprises in China, constructs an index to quantify the power of the
government vis-ā-vis the market. Regional government power is found to vary
considerably across China's regions. Notably, enterprises located in
regions where government exerts more power in the market perform better,
suggesting that the regulatory state model of the market economy is
appropriate for China.
Keywords: regulatory state; disorder costs; dictatorship costs; market economy models; China's economic reform; (follow links to similar papers)
JEL-Codes: D02; L25; P30; (follow links to similar papers)
40 pages, October 21, 2009
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