Making Reform Work: Evidence from a Quasi-natural Experiment in Rural China

Why are some reforms successfully adopted while others are not? This article addresses the question by exploring the variation in the adoption of China's "One-Issue-One-Meeting" reform. The reform, initiated by the central government in 2000, encourages rural villages to voluntarily adopt a new governing procedure that seeks to enhance local public goods provision. Using data from the 2005 Chinese General Social Survey, the authors find that villages with a more homogenous population measured by surname fractionalisation are more likely to adopt the procedure. Applying a generalised spatial two-stage least squares estimation, the authors also found a spatial spillover effect of the reform: the likelihood of a village undertaking the reform increases when its neighbouring villages also do so, and such effect is more pronounced if the neighbouring village is economically better off. This suggests a potential learning mechanism underlying the neighbourhood spillover.