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Glawe, Linda
Wagner, Helmut
Year of Publication: 
Series/Report no.: 
CEAMeS Discussion Paper No. 12/2018
Version Description: 
Updated Version
University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS), Hagen
There is a significant body of literature arguing that institutional quality is the key for long run economic growth and development. While the majority of these studies are based on cross-country growth regression, in our paper, we focus on the institution-economic growth nexus within a particular country, namely China. China is often regarded as an exception by having achieved miraculous growth for more than three decades despite relatively low institutional quality. Nonetheless, our key findings suggest that at the provincial level, institutional quality played in fact an important role for the economic success of a province in China, even more important than geographical factors and integration. However, when simultaneously examining the relationship between institutions, human capital, and provincial economic development, we find that human capital ``trumps'' everything else; however institutional quality has a highly significant indirect effect on provincial per capita income by improving human capital. We employ instrumental variable estimation techniques to address the endogeneity problems regarding the institutions-development and human capital-development relationship.
economic growth and development
deep determinants of economic growth
institutional quality
human capital
the Chinese economy
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Document Type: 
Working Paper

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