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Do Political Factors Cause the Regional Inequality in the Reform‐Era China?

Review of Development Economics

Published online on

Abstract

We construct a political variable—the number of ministers of all national government departments born in each province weighted by provincial population—to examine its effect on economic growth in China during 1981–2010. We find that the lagged per capita political variable has a significant, positive effect on economic growth in both ordinary least squares (OLS) estimation and system generalized method of moments (GMM) estimation. We also find that the lagged per capita political variable has a significant, positive effect on financial deregulation policies distributed across provinces, which offers a possible mechanism for the political variable to impact growth.