THESIS
2018
vi, 37 pages : illustrations ; 30 cm
Abstract
This thesis provides evidence that warlords, as the substitute of the state (the so-called
"stationary bandit"), had a significant positive effect on China's economic growth in the early twentieth century. Upon examining the death of Yuan Shikai (1859-1916), "the Father of Warlords", as a quasi-natural experiment, I find that firms in counties with warlords grew faster than those in counties without warlords. To further exclude a potential reverse causality problem that warlords might choose to stay in counties with better economies for taxation, I use the warlord's prototype, the Beiyang Army in the Qing dynasty, as an instrumental variable. The evidence supports this positive argument. The economic effect of warlords is evident through both direct and indirect channels. Except for d...[
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This thesis provides evidence that warlords, as the substitute of the state (the so-called
"stationary bandit"), had a significant positive effect on China's economic growth in the early twentieth century. Upon examining the death of Yuan Shikai (1859-1916), "the Father of Warlords", as a quasi-natural experiment, I find that firms in counties with warlords grew faster than those in counties without warlords. To further exclude a potential reverse causality problem that warlords might choose to stay in counties with better economies for taxation, I use the warlord's prototype, the Beiyang Army in the Qing dynasty, as an instrumental variable. The evidence supports this positive argument. The economic effect of warlords is evident through both direct and indirect channels. Except for directly investing in private firms, warlords promoted growth by providing more public goods (e.g. telegrams, railways, and hospitals), expropriating fewer taxes, and maintaining social stability. The heterogeneous effect of warlords is also examined. The empirical results suggest that the positive effect of warlords is weakened in those counties that (1) were easily attacked by others or (2) had abundant resources, but it remains positive for those treaty port counties which were influenced by western institutions.
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