The Private Sector in Public Office: Selective Property Rights in China. Forthcoming, Cambridge University Press, Cambridge Studies in Comparative Politics Series.
My book addresses the long-standing puzzle of how China’s private sector manages to grow without secure property rights. I show that instead of passively accepting the existing institutional arrangements, private entrepreneurs in China actively seek opportunities within formal institutions to advance their business interests. By securing seats in the local legislatures, entrepreneurs use their political capital to deter local officials from demanding bribes, ad hoc taxes, and other types of informal payments. In doing so, they create a system of selective, individualized, and predictable property rights. This system of selective property rights is key to understanding the private sector growth in the absence of the rule of law.
Drawing on rich empirical evidence including in-depth interviews, a unique national survey, and two original national audit experiments, this book shows how private entrepreneurs use the status and connections associated with holding a legislative seat to protect their property. I find that even while government predation is an endemic problem, entrepreneur–legislators are less likely to suffer its effects. I quantitatively show that entrepreneurs who have a seat in the local legislatures spend, on average, substantially less on informal payments to local officials than those who do not. Experimental evidence further demonstrates that Chinese bureaucrats are significantly more responsive to business people with connections in formal institutions.
These findings challenge prominent theories of economic development and suggests that a partial property rights regime can generate and sustain economic growth and political stability. Adopting an “institution as resource” perspective, I show that within authoritarian institutions, entrepreneurs can seek opportunities to advance their interests and improve their well-being, even when the powers of these formal institutions are relatively weak.