Mingpu Xiao

How has China built an extensive bureaucracy and world-leading public infrastructure despite limited tax capacity and the absence of representative institutions? I argue that under financial repression, state firms can borrow cheaply from state banks, and local governments use them both as off-budget fiscal intermediaries and as an extended arm of the state that provides public goods directly. Treating natural disasters as exogenous shocks to local fiscal pressure, I show in a firm-level difference-in-differences design that when disasters strike, local state firms borrow significantly more than private firms. A city-level panel of state-firm financial indicators shows that cities whose state sectors have greater borrowing capacity are better able to sustain their bureaucracies and public goods provision.

Does the link between external threat and support for state ownership extend beyond China? Linking the Global Sanctions Database to World Values Survey respondents and using a cohort-exposure design, I find that each year of adult life under a comprehensive trade embargo significantly raises support for state ownership, an effect concentrated in non-democracies.

Does economic development bring democracy? I develop a conditional modernization theory in which state ownership of the economy diverts the gains of growth from democratization to the maintenance of authoritarian rule. Dating the onset of modern economic growth for more than 100 countries from the economic history literature, I find that rising income is accompanied by democratization mainly where the economy at take-off was in private rather than state hands.

To what extent do rulings on trade disputes at the World Trade Organization (WTO) affect U.S. domestic politics? We use the random assignment of WTO Appellate Body (AB) judges to disputes as an instrumental variable to predict WTO-AB rulings. We find that voters in U.S. counties more exposed to adverse WTO-AB rulings were significantly more likely to vote for the Republican candidate in the 2016 U.S. presidential elections than for the Republican candidate in 2012. We measure a county’s exposure as the cumulative share of employment in industries that are affected by AB rulings, and we control for county characteristics and other trade flows, including imports from China. We find this causal effect of WTO-AB rulings on U.S. election outcomes to depend on the average educational attainment in the county and to be concentrated in counties with a high population share of residents with less than a college degree. These findings support the view that WTO-AB rulings are salient for U.S. domestic politics and have contributed to a backlash from voters in counties whose employment was exposed to adverse WTO-AB rulings.