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Economic Liberalization, the Changing Role of the State and “Wagner’s Law”: China’s Development Experience since 1978

Authors
Journal
World Development
0305-750X
Publisher
Elsevier
Publication Date
Volume
33
Issue
5
Identifiers
DOI: 10.1016/j.worlddev.2004.12.001
Keywords
  • Asia
  • China
  • Economic Growth
  • Public Sector
Disciplines
  • Economics
  • Political Science

Abstract

Summary The paper applies Wagner’s Law of increasing state activity to illustrate the changing function of the state in China as a consequence of economic liberalization. Wagner’s Law describes the association between increasing national wealth in progressive states and the rise in state activity and expenditure. This indicates that the causes of bureaucratic expansion are to be sought, not just in terms of political pressures, but the interplay between political considerations and the economic necessities, resulting from the emergence of new property rights. A simple illustrative model is developed to measure the effects of increasing national wealth and the growth of the public sector. This suggests that the patterns of economic development observed by Wagner in 19th century Europe are not unlike those observed in China today.

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