TY - JOUR
T1 - Crony capitalism, the party-state, and the political boundaries of corruption
AU - Li, Weijia
AU - Roland, Gérard
AU - Xie, Yang
N1 - Publisher Copyright:
© 2022 The Author(s)
PY - 2022/9
Y1 - 2022/9
N2 - We build a model that puts together crony capitalism, the hierarchy of the Chinese communist party-state, and the decision-making process inside the Party Center. We show that inefficient economic institutions create local corruption that raises realized productivity, while generating rents that flow along the party-state hierarchy up to the provincial level, threatening the Center's control in potential crises. Although both stronger crisis control and higher economic performance help the Center's goal to stay in power, we show that given a general fat-tailed risk of crisis, the Center will maximize crisis control at the expense of the economy when choosing its tolerance of local corruption. Power structure and corruption within the Center and reciprocal accountability between central and provincial leaders are also analyzed. Our analysis suggests conditions under which China's communist regime will or will not deal with the existential threat presented by corruption.
AB - We build a model that puts together crony capitalism, the hierarchy of the Chinese communist party-state, and the decision-making process inside the Party Center. We show that inefficient economic institutions create local corruption that raises realized productivity, while generating rents that flow along the party-state hierarchy up to the provincial level, threatening the Center's control in potential crises. Although both stronger crisis control and higher economic performance help the Center's goal to stay in power, we show that given a general fat-tailed risk of crisis, the Center will maximize crisis control at the expense of the economy when choosing its tolerance of local corruption. Power structure and corruption within the Center and reciprocal accountability between central and provincial leaders are also analyzed. Our analysis suggests conditions under which China's communist regime will or will not deal with the existential threat presented by corruption.
KW - Autocracy
KW - Chinese Communist Party
KW - Corruption control
KW - Reciprocal accountability
KW - State apparatus
UR - http://www.scopus.com/inward/record.url?scp=85127357419&partnerID=8YFLogxK
U2 - 10.1016/j.jce.2022.02.002
DO - 10.1016/j.jce.2022.02.002
M3 - Article
AN - SCOPUS:85127357419
SN - 0147-5967
VL - 50
SP - 652
EP - 667
JO - Journal of Comparative Economics
JF - Journal of Comparative Economics
IS - 3
ER -