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Why Do Entrepreneurs Enter Politics? Evidence from China
Author(s) -
Li Hongbin,
Meng Lingsheng,
Zhang Junsen
Publication year - 2006
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbj031
Subject(s) - underdevelopment , politics , economics , institution , china , state (computer science) , set (abstract data type) , market economy , economic system , economic growth , political science , law , algorithm , computer science , programming language
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 )