Integration in the absence of institutions: China–North Korea cross-border exchange
AbstractTheory tells us that weak rule of law and institutions deter cross-border integration, deter investment relative to trade, and inhibit trade finance. Drawing on a survey of more than 300 Chinese enterprises that are doing or have done business in North Korea, we consider how informal institutions have addressed these problems in a setting in which rule of law and institutions are particularly weak. Given the apparent reliance on hedging strategies, the rapid growth in exchange witnessed in recent years may prove self-limiting, as the effectiveness of informal institutions erode and the risk premium rises. Institutional improvement could have significant welfare implications, affecting the volume, composition, and financial terms of cross-border exchange.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Asian Economics.
Volume (Year): 23 (2012)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/asieco
Economic integration; Property rights; Institutions; Transition; China; North Korea;
Other versions of this item:
- Marcus Noland & Stephan Haggard & Jennifer Lee, 2011. "Integration in the Absence of Institutions: China-North Korea Cross-Border Exchange," Working Paper Series WP11-13, Peterson Institute for International Economics.
- P3 - Economic Systems - - Socialist Institutions and Their Transitions
- P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
- F15 - International Economics - - Trade - - - Economic Integration
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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