Research Articles: Rent-Seeking Obstacles to Changing Environmental Practices and Sustainable Public Procurement in China

Abstract

Over the last 30 years China has enjoyed economic growth averaging about 10% of gross domestic product (GDP) per year. But this economic growth has come at a high environmental cost. In China approximately 750,000 premature deaths a year are attributed to high levels of environmental pollution. With the recent 12th Five Year Plan (FYP) China's leadership announced the launching of a green revolution that would balance the need for robust economic growth with concern for the environment and combating climate change. This paper utilizes a rent-seeking framework to explore some of the obstacles inhibiting more environmentally sustainable policies in China. We describe the situation as a struggle over the proper aligning of the individual actor's behavior within an opportunistic governance structure, and we argue that rent seeking and corruption creates substantial hurdles to promoting green environmental practices and programs.

Acknowledgments

We would like to thank the three anonymous referees who gave substantial and detailed feedback on the original version of this work. As always, we are responsible for all inaccuracies. In addition, the order of authorship was determined by coin toss.

Notes

Notes

1. For a more precise treatment of rent-seeking, see Tullock (1967; 2003) and Krueger (1974). Also see Murphy, Shleifer, and Vishny (1993).

2. Policy returns can be described as positive, neutral, or negative. This is in contrast to having returns characterized as large, small, or none.

3. According to the official China Communist Party English website (http://english.CCP.people.com.cn/66102/6758183.html), the highest leading body of the Party is the National Congress and the Central Committee elected by it.

4. This is not to deny that merit is not a factor in promotion in China—we think it is, but the point here is that there are other criteria that are at least as important.

5. Here again, compensation can be either monetary or nonmonetary, or both.

6. For a more formal treatment of the derivation and measurement methodologies of the World Governance Indicators, see Kaufmann, Kraay, and Mastruzzi (2010).

7. Figure 2 plots the 13 Asian countries' percentile ranks with their respective 90% confidence intervals on the vertical axis. In addition, these countries' point estimates of CoC governance are ordered along the horizontal axis.

8. This is because the numbers of sources for establishing the scores varies by country, and this leads to mixed levels of precision—hence differing confidence intervals.

9. The percentile rank was based on N=205 countries, and the scores obviously range from 0 for the lowest, to 100 for the highest percentile rank. However this fact has no substantive impact on the discussion.

10. 2010 Asia rankings were calculated in order to include data for both New Zealand and Australia (they had not released their 2011 data). 2010 data was not available for Taiwan.

11. GNI (gross national income) is gross domestic product plus net receipts of primary income (employee compensation and investment income) from abroad. This is then divided by mid-year population before being converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GNI as a U.S. dollar has in the United States. Purchasing power parities (PPPs) are the rates of currency conversion that eliminate the differences in price levels between countries. The data comes from The World Bank (2012b) retrieved 03-11-2012 from http://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD

12. This excludes Australia and New Zealand (see previous footnote 10 on this).