DP8012 The Institutional Causes of China's Great Famine, 1959-61

Author(s): Xin Meng, Nancy Qian, Pierre Yared
Publication Date: September 2010
Keyword(s): central planning, development, food procurement, institutions, modern Chinese history, prices vs. quantities
JEL(s): N45, O45, P2
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8012

This paper investigates the institutional causes of China's Great Famine. It presents two empirical findings: 1) in 1959, when the famine began, food production was almost three times more than population subsistence needs; and 2) regions with higher per capita food production that year suffered higher famine mortality rates, a surprising reversal of a typically negative correlation. A simple model based on historical institutional details shows that these patterns are consistent with government policy failure in a centrally planned economy in which the government is unable to easily collect and respond to new information in the presence of an aggregate shock to production.