Does meritocratic promotion explain China's growth?

One explanation for China’s rapid economic growth is meritocratic promotion, where politicians with higher GDP growth are rewarded with promotion. In this system, politicians compete against each other in ‘promotion tournaments’ where the highest growth rate wins. This competition incentivizes politicians to grow the economy, and hence helps explain the stunning economic rise of China.

The literature on meritocratic promotion finds evidence of meritocracy for province, prefecture, and county leaders.¹ However, as I discuss in my dissertation, the evidence for province and prefecture leaders is weak. In the provincial literature, the initial positive finding was not confirmed in follow-up studies. And when I replicated the prefecture literature, I found that the results there were not robust. So we don’t have strong evidence that province and prefecture leaders are promoted based on GDP growth. But, using data from two papers, I did find some evidence for meritocratic promotion of county leaders (details here).

So how should we think about meritocracy in China? Despite the lack of evidence for meritocratic promotion at the province and prefecture levels, it’s still plausible that meritocracy has contributed to China’s growth. Let’s grant that county leaders are promoted meritocratically, directly incentivizing them to boost GDP growth.² This means that high-growth county leaders are promoted to prefecture positions. But since prefecture leaders then consist only of high-growth leaders, there isn’t enough variation in growth to implement a prefecture-level promotion tournament. In other words, range restriction prevents the Organization Department from implementing meritocratic promotion above the county level. Running a successful county-level promotion tournament precludes prefecture and provincial tournaments. Hence, the Organization Department must use other criteria in determining promotions of prefecture and provincial leaders.

So county leaders are continuously incentivized to boost economic growth, and only leaders with demonstrated growth-boosting ability are promoted to prefecture and provincial positions. While they are not directly incentivized, these prefecture and province leaders are selected based on their ability to grow the economy, and they supervise the county leaders in their prefecture/province. We can think of this as a version of partial meritocracy, in contrast to a ‘maximal’ version where leaders at all levels are incentivized through promotion tournaments. While the maximal version provides the strongest incentives for boosting GDP growth, the partial version does generate some incentives as well.

Thus, despite the lack of evidence at higher levels of government, meritocracy does partly explain China’s economic growth.

Footnotes

Read my papers on meritocratic promotion: null result and replications.