This dissertation is concerned with path dependency in the development of peripheral regions from an institutional perspective. There is a considerable literature in multiple related disciplines, focusing on the role of institutional dynamics in affecting the development of peripheral countries or regions within bigger domestic markets. However, little work has been done, either empirically or theoretically, on the role of multilevel state agencies, politics, policies, and their implication on local economy evolution. Much of the research that has been done use evidence and knowledge derived from European and American contexts. Therefore, the key aims of this thesis are to 1) theoretically, syntheses economic geography perspectives with the institutional political economy approach, to give a better understanding of the development processes and mechanisms of peripheral regions; and 2) empirically, to examine the nature of a peripheral development in Guangxi, which is a Chinese autonomous region (rarely mentioned by studies of recent Chinese economy development), in a rapidly industrialising economy, based on an in-depth investigation of this peripheral region’s development. The thesis argues that Guangxi’s development trajectory has been influenced in various ways by the provisions of cumulative processes starting from its peripheral status, and further influenced by decades of development policies, state ideology, and institutional arrangements at both regional and national level. The thesis pays more attention to how the political, economic, and social institutions of a specific region, respond to changing environments in both the national and world economy. An in-depth case study of Guangxi, (in the far south of China) shows its slow economic growth compared with other coastal counterparts. The findings are derived from extant historical research and data and a primary qualitative method involving semi-structured interviews. The thesis re-examines the performance of China as a national economy in the world economic system, and how the domestic core and periphery relationship has evolved along with the process. It finds that although in general, the Chinese economy managed to restore its status in the world economy to a certain extent, local economies’ development remained highly uneven, due to changing domestic core and periphery relationships. The concepts of core and periphery, and cumulative causation are critically examined. A conceptual framework for analysing and understanding path dependence is built upon an in-depth theoretical synthesis that deconstructs the idea of evolution between path creation and preservation. It redefines them in a historical way. The examination highlights the importance of local institutions in coordinating the behaviour of macro-level political economy change. In this case, the historically conditioned political distance between regions and the central state is essential. Together they can help to fundamentally understand the mechanism behind the lock-in of development trajectory of a region in China. Path dependency should be placed at the core to explore the question of why some regions such as Guangxi remain mostly at the mercy of exogenous forces and assets, while others manage the endogenous place-based development of economies. The empirical evidence suggests that the cumulative effects which facilitate China’s regional disparities are substantially politically constituted, due to the Chinese-specific political-economic system. I conclude that both the egalitarian policies during the planning economy era and the latter neoclassical reform focus on promoting national aggregate growth had the most crucial impact on the current state of China’s economic geography. Finally, this thesis provides new evidence of forces that are likely to interrupt the logic underlying existing mechanisms to suggest policies for the future development of Guangxi.