The micro-foundations of institutional change in reform China: Property rights and revenue extraction in the rural industrial sector

A comparative study of three locales, the dissertation focuses on the evolution of property rights and extractive institutions in the rural industrial sectors of Shanghai, Wuxi, and Wenzhou. It shows how the actions of local state officials shaped the development of property rights in industry and how the structure of property rights, in turn, influenced the institutions of the local state. Underlying the analysis is an assessment of the economic and political incentives facing local party and government officials, shaped by the fiscal system and the cadre evaluation system, which placed local control over revenue at the forefront of local cadre concerns.; Although the full array of property rights forms, including variants of public, private, and foreign ownership can be found in all three locales, the concentration varied markedly across the three sites during the late 1980s and early 1990s. The study demonstrates that these patterns emerged as a result of the rational responses of local cadres to common revenue imperatives and distinct resource constraints at the initiation of reform. The study also analyzes the mechanisms used to elicit credible commitments on the part of central and local governments to private forms of property rights.; The varied structures of property rights in each of the three locales were associated with different levels of transaction costs of revenue extraction and different distributions of bargaining power within the local community. These factors shaped the ways in which local state institutions responsible for revenue extraction and financing of public goods evolved. Thus, the study demonstrates the close linkage between the development of state and market institutions. Finally, the study addresses the implications of local institutional arrangements for the ability of the central state to extract revenue from an economy in transition from planning to the market.