Summer in the Field: Understanding Bureaucracy and State Capacity Building in Southern China

By Yuheng Zhao

State capacity is the ability of state to collect taxes, enforce law and order and provide public goods. It is well acknowledged that rich countries are featured with capable states, while “failed” nations in general are characterized by incompetent states. Important as an effective state is, little is known about the building blocks of it. Specifically, what is the relationship between an effective state and long-run economic growth, and how state capacity can be built through a well-functioning bureaucracy system remains an open question owing to theoretical ambiguity and a paucity of data in practice.

Bureaucrats tend to stay in their jobs for a long time than politicians who come and go at the mercy of the electorate or their superiors. Among them, junior bureaucrats and frontline providers, while not designing policies, determine the level of effort involved in implementing them. In addition, they provide first-hand information before, during and after policy implementation. However, compared with politicians, the role of bureaucrats in development is much under-studied.

Existing literature on bureaucracy has shown clear evidence that providing incentives could improve an individual bureaucrat’s performance. However, researchers have recognized that bureaucracy is not just a collection of independent individuals, but a system with complex interactions between individuals and factions. There is relatively limited evidence on the how bureaucracy system stimulated structural transformation and development at the state-level. Since large-scale randomized controlled trials are difficult to implement at such a high level, natural experiments may help answer these questions.

As part of the Summer in the Field Fellowship program sponsored by the Boston University Global Development Policy Center this summer, I investigated how the assignment of non-local officials by the Chinese central government in the early 1950s (henceforth called “southbound officials”) influenced the local social-economic development and policy implementation, which in turn impacted the social capital and trust. China’s southbound official program provided a unique natural experiment ideal for the study of the bureaucracy system.

The Kuomintang (KMT) government lost its reign in mainland China soon after its military failure in China’s civil war between 1946-1949. To quickly fill the power vacuum left by the KMT, the central government of the People’s Republic of China sent around 100,000 cadres to the newly liberated south China, which was the largest political migration of officials in the world. Those southbound officials were assigned to all levels of the local governing bureaucracy, including both county leaders and grassroots bureaucrats. They formed a new group of bureaucrats in the local administration, who have relatively limited joint interest with the local community. In addition, most of them stayed in the south throughout their lives. The southbound officials were believed to have greatly shaped the local development policy since the 1950s, not only in the economy but also in health, education, family planning and other sectors.

When allocating southbound officials, priority was given to places with a large population, rich resources, arteries of transportation and military hubs, and fewer southbound officials were appointed if the region had already been taken by guerrilla troops before the People’s Liberation Army arrived. There were many collaborations between southbound officials and local officials. In some counties, southbound officials and local (guerrilla) officials served as sectary and government leaders respectively in the 1950s, and they worked together to eliminate bandits and restore stability and production after the civil war. However, there were also tensions between the two groups of bureaucrats. For example, how quickly should land reform be implemented? The relative strength of the southbound and local bureaucrats varied across counties, and local officials tended to take more important roles if the counties were liberated by guerrilla forces.

To investigate, I built a county-level dataset for non-local bureaucrats and other county-level social economic outcomes in three provinces in the southern part of China (Hunan, Jiangxi and Fujian), and randomly selected 30 counties in each province to conduct a survey about individuals’ values and identities. I first explored how the variation in the share of southbound officials influenced state capacity and development at the county level. A country with top-down policy design faces two main challenges in building its state capacity: first, how to implement its policy effectively when there are conflicts between the central and local interests; second, without re-election pressure, what incentivizes a local government to maintain its accountability. Appointing non-local bureaucrats may improve state capacity by causing competition between different factions within the government. The non-local officials prefer to show loyalty to the central government, while the local officials seek support from the grassroots. As a result, a larger fraction of non-local bureaucrats may favor the implementation of the central government’s policy while potentially sacrificing local accountability, and the impact on long-term development is an open question.

A preliminary analysis of the newly collected data suggests that, with other conditions remaining the same, counties with higher share of southbound officials tended to implement policies more effectively in the interest of central government, as those counties had higher ratios of tax over gross domestic outputs and lower population growth rates. The former was an indicator of tax efforts, while the latter was likely to be a result of the strictly implemented one-child policy. On the other hand, counties with a smaller share of southbound officials tended to have more balanced government budgets. As for the social capital, individuals from counties with more southbound officials had higher levels of trust towards people outside of their hometowns.

Although the above evidence is preliminary, my findings suggest that southbound official program had long-lasting impacts on state capacity and regional development. As a bureaucracy system which appointed non-local bureaucrats to local governments, it not only influenced economic outcomes, but also shaped individuals’ values and trusts.

*

Yuheng Zhao is an PhD Candidate in Economics at Boston University and a 2022 Summer in the Field Fellow. Learn more about the Summer in the Field Fellowship Program.