China’s fast-paced growth over the past three decades is one of the most remarkable events in world economic history. This growth was fueled by the introduction of pro-market policies, especially in agriculture and trade. However, China’s national institutions continue to restrict property rights and hinder private business development, among other obstructive policies. To counter those forces, China has developed a system of crony capitalism at the local level that has allowed businesses to thrive. Political leaders benefit when local businesses succeed, so those leaders use their power to enhance certain businesses’ success. Local political leaders then compete with other cities for businesses, creating a competitive market that helps drive economic growth.
On February 22, the Becker Friedman Institute for Economics at the University of Chicago (BFI) hosted Chang-Tai Hsieh, the Phyllis and Irwin Winkelried Professor of Economics and PCL Scholar at the Booth School of Business, for a Becker Brown Bag lecture on “Crony Capitalism with Chinese Characteristics.”