De facto power in a transition economy: The case of China |
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Affiliation: | 1. Carey Business School, Johns Hopkins University, 100 N. Charles Street, Baltimore, MD 21201, USA;2. International Business School, Xi''an Jiaotong Liverpool University, No 8, Chongwen Road, Suzhou, China;3. Carey Business School, Johns Hopkins University, 100 International Drive, Baltimore, MD 21201, USA;4. Department of Finance and Accounting, China Europe International Business School, Shanghai, China |
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Abstract: | That firms actively influence public policy to advance private interests is taken for granted in most economies. In China, the activism of public actors in shaping private interests suggests that the public rather than private sector is more influential to the political economy. In this paper, we test the extent to which this is true in among Chinese provinces. We conduct a cluster quasi-experiment using the 2012 anti-corruption campaign. We find that the declining involvement of public actors in economic decisions during the campaign did not result into lower productivity in provinces with higher private sector participation, especially in unregulated industries and those not dominated by state-owned enterprises. De facto political power from 30-years of private wealth accumulation may have helped establish market-driven norms of economic behavior, strengthening the political economy against the vicissitudes of public actors. |
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Keywords: | Political economy De facto power Private sector Transition economy China |
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