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ID:
142791
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| Summary/Abstract |
Since the early reform days and particularly during the Hu-Wen era, the local state has seen remarkable changes triggered by the central government's new focus on rural development and rural-urban integration. The "peasant burden" was reduced by the tax-for-fee reforms in 2002 and the abolition of the agricultural tax in 2006. Fiscal transfers were increased to provide more funding for local governments in order to ensure reasonable public goods provision as well as investment in agricultural modernization and in situ urbanization. At the same time, the performance evaluation of local cadres and government units has been streamlined to enforce stricter compliance with upper level policy guidelines and local governments have been systematically encouraged to engage in policy experimentation and innovation by linking policy success to cadre promotion. However, the local state, at all levels, is still struggling with "un(der)-funded" mandates, rising public demand and, as often reported, social protest. Against this background, this article argues that the concept of local developmentalism can still serve as a useful analytical tool to explain state-business relations at county level and below. The local state has maintained its control over private sector development and entrepreneurial agency by becoming an "interested facilitator" and "enabler" by withdrawing from its position as bureaucratic patron, cadre entrepreneur and corporate agent.
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| 2 |
ID:
112428
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| 3 |
ID:
121193
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| Publication |
2013.
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| Summary/Abstract |
Empirical studies on total factor productivity growth (TFPG) in developing countries highlight trade openness, research and development and market structure as being the most important determinants of TFPG. The role of institutions remains overlooked in the literature on the determinants of TFPG. In this article, we look into the role of institutional quality as captured by effective state-business relationships (SBRs) in influencing TFPG, using Indian manufacturing as a case study. By SBRs we mean a set of highly institutionalized, responsive and public interactions between the state and the business sector. To compute TFPG, we use firm level data for both the formal and informal manufacturing sectors. We correct for the simultaneity bias associated with the production function approach for TFPG estimation by employing a method developed by Levinsohn and Petrin. We propose measures of effective SBRs for 15 Indian states over the period 1994-2005, and then use them in TFPG equations to estimate the effect of SBR on TFPG. The results indicate that SBR has positively affected the TFPG of Indian industry. The effect, however, is primarily for the formal sector.
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