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Economic integration in China: Politics and culture

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  • Herrmann-Pillath, Carsten
  • Libman, Alexander
  • Yu, Xiaofan

Abstract

The aim of the paper is to explicitly disentangle the role of political and cultural boundaries as factors of fragmentation of economies within large countries. On the one hand, local protectionism plays a substantial role in many federations and decentralized states. On the other hand, if the country exhibits high level of cultural heterogeneity, it may also contribute to the economic fragmentation; however, this topic has received significantly less attention in the literature. This paper looks at the case of China and proxies the cultural heterogeneity by the heterogeneity of local dialects. It shows that the effect of politics clearly dominates that of culture: while provincial borders seem to have a strong influence disrupting economic ties, economic linkages across provinces, even if the regions fall into the same linguistic zone, are rather weak and, on the contrary, linguistic differences within provinces do not prevent economic integration. For some language zones we do, however, find a stronger effect on economic integration.

Suggested Citation

  • Herrmann-Pillath, Carsten & Libman, Alexander & Yu, Xiaofan, 2014. "Economic integration in China: Politics and culture," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 470-492.
  • Handle: RePEc:eee:jcecon:v:42:y:2014:i:2:p:470-492
    DOI: 10.1016/j.jce.2013.10.003
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    More about this item

    Keywords

    Growth spillovers; Border effects; Culture and economic integration; China; Local protectionism;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • F1 - International Economics - - Trade
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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