Proposal preview

State Capacity and Economic Development: Historical Experience from China

In recent years, state capacity has become one of the most discussed concepts in development economics and political economy. Many economists have highlighted the importance of state capacity in explaining why some countries have achieved economic development but others not (e.g., Acemoglu and Robinson, 2016; Besley and Persson, 2010, 2011; Dincecco and Katz, 2014; Johnson and Koyama, 2017). Most studies, however, focus on the European experience. Much less is known for other important cultures, in particular China that has the longest imperial regime in global history.
China provides a unique historical context of state capacity. Different from Europe whose rise from the 16th to 19th centuries was allegedly attributed to its political fragmentation (Montesquieu, 1989; Jones, 2003; Mokyr, 1990), China retained a unified empire with political centralization and sophisticated administrative institutions for millennia. In this connection, it should be meaningful to examine the role of state capacity in China’s political and economic development in the long run.
The session consists of five papers. The first paper, entitled “Building State Capacity for State Formation: A Quantification of Pre-Qin Case” (Dong and Guo, 2017), discussed the formation of state capacity in the pre-Qin period (the Spring and Autumn period (770BC-481BC) and the Warring States period (480BC-221BC)), which represents an important political transformation—from feudalism to bureaucracy in ancient Chinese society. Using the wars as a proxy for fiscal capacity, they find that the establishment of county had a positive effect on a state’s capacity to wage offensive wars and/or the odds of defeating the external invasion. This suggests that, compared with the aristocracy, the bureaucracy could substantially improve a state’s fiscal capacity in ancient China. In the second paper titled “Geography, Political Integration, or Both: How China Became Chinese”, Kung, Li and Lin (2016) attempt to examine the question “How China became Chinese” mentioned by Jared Diamond (1997) in Gun, Steel and Germs. They find that, by providing public good in education and irrigation political integration (measured by the duration of the system of prefectures and counties) has a positive effect on the distribution of Han Chinese. In the third paper, “Disaster Relief in the Late Imperial China: An Empirical Study of the Great Drought in the 1870s”, Li, Yan and Zhang (2018) study the effect of state capacity on disaster relief in the late Imperial China. Using the prefectures-level dataset in the 1870s, they find that the Great Drought in the 1870s lead to more than 20 million population loss, and local Grain system have no effect on reducing population loss but gentries play important role in disaster relief.
The last two papers discussed the effect of state capacity on gentry and financial market in late imperial China. In the paper titled “Bring Down the Gentry: The Abolition of Exam, Local Governance and Anti-Gentry Rebellions, 1902-1911”, Hao, Liu and Zhou attempt to tests the impact of abolition of civil service exam in 1905 on local governance in rural China. We find that one standard deviation increase in this ratio is associated with 0.11 more incidents of anti-gentry uprisings (nearly half of the average level) after the abolition of exam. This impact gets greater as “local autonomy campaign” was spread over the country in 1909. This paper highlights the importance of long-run incentives in improving the quality of public agents. It also contributes to the literature discussing the impacts of abolition of exam on social stability and deep driving forces of Chinese revolution in the 20th century. In the last paper, “Oversea Silver Inflow and the Price Revolution in Qing China”, Hu, Zhao and Zhu (2017) attempt to exams the so-called price revolution hypothesis in the late imperial China, using a panel data including 38 prefectures from 1749 to 1898. They find that the inflow of oversea silver significantly raises the rice price in southeast China while not in South-west China. In addition, they also find that the impact of price revolution is relatively weaker in magnitude compared with the European price revolution.

Organizer(s)

  • Nan Li Shanghai University of Finance and Economics nanli_sufe@163.com China
  • Baomin Dong Henan University baomindong@vip.163.com China

Session members

  • Baomin Dong, Henan University
  • Nan Li, Shanghai University of Finance and Economics
  • Se Yan, Peking University
  • Hongjun Zhao, Shanghai Normal University
  • Yu Hao, Peking University

Discussant(s)

  • Tuan-Hwee Sng National University of Singapore
  • Cong Liu Shanghai University of Finance and Economics
  • Se Yan Peking University

Papers

Panel abstract

In recent years, state capacity has become one of the most discussed concepts in development economics and political economy. Many economists have highlighted the importance of state capacity in explaining why some countries have achieved economic development but others not. Most studies, however, focus on the European experience. Much less is known for other important cultures, in particular China that has the longest imperial regime in global history. China provides a unique historical context of state capacity. Different from Europe whose rise from the 16th to 19th centuries was allegedly attributed to its political fragmentation, China retained a unified empire with political centralization and sophisticated administrative institutions for millennia. So, in this session, we will examines the role of state capacity in China’s political and economic development in the long run.

1st half

Building State Capacity: An Analysis of Pre-Qin China

Baomin Dong Yibei Guo

The pre-Qin period, particularly the Spring and Autumn period (770BC-481BC) and the Warring States period (480BC-221BC) witnessed the great transformation of the Chinese society from a classical feudal system to a two millennium long centralized empire. The scale and ferocity of the war increased tremendously from Spring and Autumn to Warring States time. Aggression wars can be used as a proxy for fiscal capacity since the fiscal capacity, the governance capacity, and public goods provision capacity as three main dimensions of state capacity, are all incorporated in the capacity to wage wars. Using panel data on Great Wall construction in related states; time spans that one or more prime ministers were installed; counties established chronically by the states; natural disasters; disaster or famine relief; flights of high rank nobility or officials; time and nature of the “selfstrengthening reform”; etc., we regress the frequency of war against institutional and control variables....

The pre-Qin period, particularly the Spring and Autumn period (770BC-481BC) and the Warring States period (480BC-221BC) witnessed the great transformation of the Chinese society from a classical feudal system to a two millennium long centralized empire. The scale and ferocity of the war increased tremendously from Spring and Autumn to Warring States time. Aggression wars can be used as a proxy for fiscal capacity since the fiscal capacity, the governance capacity, and public goods provision capacity as three main dimensions of state capacity, are all incorporated in the capacity to wage wars. Using panel data on Great Wall construction in related states; time spans that one or more prime ministers were installed; counties established chronically by the states; natural disasters; disaster or famine relief; flights of high rank nobility or officials; time and nature of the “selfstrengthening reform”; etc., we regress the frequency of war against institutional and control variables. Our panel limited dependent variable models indicate that institutional factors such as county establishment, installment of prime ministers, and self-strengthening reforms, had substantial effect on a state’s capacity to wage offensive wars, and the statistical significance of the coefficient is surprisingly high. Furthermore, a pro-Legalist reform outperformed the pro-Confucian reforms in cultivating state capacity.

Geography, Political Integration and Both: How China Became Chinese?

Nan Li Youhong Lin

Disaster Relief in the Late Imperial China: An Empirical Study of the Great Drought in the 1870s

Nan Li Se Yan Duo Zhang

2nd half

Bring Down the Gentry: The Abolition of Exam, Local Governance and Anti-Gentry Rebellions, 1902-1911

Yu Hao Zhengcheng Liu Li'an Zhou

This paper tests the impact of abolition of civil service exam in 1905 on local governance in rural China. Before the abolition, lower exam title holders (lower gentry) provided public services at local level, on their path towards obtaining higher status and holding official positions. The abolition of exam provided would be public agents greater incentive to obtain modern education in urban area, but wiped off the long run return prospect from providing services in rural area,deteriorating both the incentive and selection of the public agents. We use the number of Juren, provincial exam passers, divided by the number of lowest exam quota to measure lower gentry’s long-run return prospect. We find, using a DID strategy, that one standard deviation increase in this ratio is associated with 0.11 more incidents of anti-gentry uprisings (nearly half of the average level) after the abolition of exam. This impact gets greater as "local...

This paper tests the impact of abolition of civil service exam in 1905 on local governance in rural China. Before the abolition, lower exam title holders (lower gentry) provided public services at local level, on their path towards obtaining higher status and holding official positions. The abolition of exam provided would be public agents greater incentive to obtain modern education in urban area, but wiped off the long run return prospect from providing services in rural area,deteriorating both the incentive and selection of the public agents. We use the number of Juren, provincial exam passers, divided by the number of lowest exam quota to measure lower gentry’s long-run return prospect. We find, using a DID strategy, that one standard deviation increase in this ratio is associated with 0.11 more incidents of anti-gentry uprisings (nearly half of the average level) after the abolition of exam. This impact gets greater as "local autonomy campaign" was spread over the country in 1909. This paper highlights the importance of long-run incentives in improving the quality of public agents. It also contributes to the literature discussing the impacts of abolition of exam on social stability and deep driving forces of Chinese revolution in the 20th century.

American Silver Inflow and the Price Revolution in Qing China

Hongjun Zhao Yumei Hu Jialiang Zhu