A Model of Chinese Central Government: the Role of Reciprocal Accountability

Why was the same state in China able to promote economic growth in the reform era but not in the previous thirty years? In this paper we focus on a speci…c aspect that might help the search for a comprehensive explanation: the speci…c institutional arrangement that induced autocratic government to adopt growth-enhancing policies. To this aim, we consider a standard political agency model (Besley, 2006) where the incumbent leader may be either congruent or not, and where both types need the support of the selectorate to hold on to power. Our main result is that in autocracies without electoral discipline, to restrain the opportunistic behavior of a leader, the size of the selectorateshould be intermediate: if too small, the selectorateis captured by the leader and has no disciplinary role; if too big, the leaders incentives are diluted.