Provincial Growth in China

The last decades have seen increasing empirical support for the argument that institutional quality has a significant impact on economic growth. However, in these cross-national studies China often seems to be an exception. Despite weak institutions, encroachments on property rights and the rule of law, China has achieved growth rates surpassing all other developing economies. This study asks whether or not China is an exception to the rule, or alternatively, if institutional development at province level has been a driving force behind economic growth. Ordinary least squares is used to test the relationship between institutional development and real growth rates, while controlling for fixed capital, human capital, international integration and geographic location. The results show that institutions are not statistically significant in explaining economic growth among the provinces of China. Growth instead seems to primarily have been driven by investment in fixed capital