A Political Economy Perspective on Institutional Change in China.

In this thesis a political economy perspective on institutional change comprising the public choice theory and the interest group theory is adopted to identify forces that have been driving the process of institutional change in China. Representing the public choice perspective are state strength and state incentive variables whereas one domestic and one foreign interest group, managers of state owned companies and foreign investors respectively, account for the interest group perspective. The result of this study suggests that monetary and fiscal incentives among China’s provincial level governments have constituted a driving force on institutional development. No support for interest group influence is found.