Title: Warlords, Commercial Organizations, and Industrial Development in Early Twentieth-Century China

Speaker: Assistant Professor Cong Liu, Shanghai University of Finance and Economics

Time: December 8th, 2016 13:30–15:00 

Venue: Conference Room 106B, Zhonghui Building (College of Economics, JNU)

Abstract:

This paper examines how territory size affects industrial development using a newly complied dataset about early twentieth-century China. From 1916 to 1927, China was de facto divided into regions controlled by different warlords. While all warlords fought with each other for a larger territory, each province had different governance structure, depending on the total size of a warlords’ territory. Warlords with greater territory adopted a more decentralized political structure. I use variations in warlords’ territory size over time to perform a difference-in-differences analysis, examining the impact on newly established domestic industrial firms. I find that areas ruled by big warlords experienced greater increase in the number of new industrial firms. In addition, this pattern could be explained by the rise of local commercial organizations. Warlords with greater territory size relied more on commercial organization in local governance. I collect rich information to control for other socioeconomic conditions that were likely to affect industrial growth, including political riots, foreign settlements, and international trade. These results suggest that, similar as the western countries’ experience, commercial organizations played a supportive role in China’s early industrial development, yet these organizations required a decentralized political environment to form and function.