Why Do Entrepreneurs Enter Politics? Evidence from China |
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| Authors: | Hongbin Li Lingsheng Meng Junsen Zhang |
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| Institution: | Li:;Assistant Professor, Department of Economics and School of Economics, Chinese University of Hong Kong, Shatin, N.T., Hong Kong. Phone 852-2609-8185, Fax 852-2603-5805, E-mail Meng:;Ph.D. student, Department of Economics, University of Maryland, College Park, MD 20742. Phone 1-301-422-0304, Fax 1-301-405-3542, E-mail Zhang:;Professor of Economics, Department of Economics and School of Economics, Chinese University of Hong Kong, Shatin, N.T., Hong Kong. Phone 852-2609-8186, Fax 852-2603-5805, E-mail |
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| Abstract: | This article examines the determinants of the entrepreneur's political participation by employing a unique matched firm-institution data set from China. We find that the likelihood of an entrepreneur's participation can be explained by the underdevelopment of markets and market-supporting institutions. According to our estimates, the probability of entering politics decreases by 8–20% from the mean when the institutional indices improve by one standard deviation. Our findings support the view that the institutional environment shapes the private entrepreneur's motivation to participate in politics; they also provide an example of how private entrepreneurs respond to state/market failure in developing and transition countries. (JEL G1, H00, O10, P2, P3 ) |
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