The legacy of the Great Wall

This paper examines the long-term effects of historical institutions on modern economic development. The Ming Great Wall, built to prevent incursions from northern barbarian nomads, divided China, which encouraged institutionalized self-governance, from the patron-client model of the nomads who lacked a system of local government or a fiscal and legal system. By exploring this cutoff and using a geographical regression discontinuity design (GRDD) framework, we document that present-day economic development, as measured by nighttime light intensity, exhibits a discontinuity at the Great Wall. After considering other potential explanatory factors, we suggest that the differences in the administration established during the Ming dynasty might explain this discontinuity. The immediate impacts on the economic outcomes during the succeeding dynasty and the persistent differences in institutional development proxies, which serve as deep determinants of economic development, represent supplements to our findings.