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Do institutions not matter in China? Evidence from manufacturing enterprises

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  • Lu, Yi
  • Png, Ivan P.L.
  • Tao, Zhigang

Abstract

This study addresses the apparent puzzle that China achieved spectacular economic performance despite weak institutions. Using a World Bank survey of 1566 manufacturing enterprises in 18 Chinese cities, we investigated whether property rights protection mattered for enterprise performance. We found that property rights protection had a positive and statistically significant impact on enterprise productivity. Two-step GMM estimation and heterogeneous response estimation further established the causal impacts of property rights protection on enterprise productivity. These findings were robust to various controls, exclusion of outliers, and alternative measures of productivity and property rights protection.

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  • Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 74-90.
    • Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:74-90
    DOI: 10.1016/j.jce.2011.11.002
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    More about this item

    Keywords

    Institutions; Property rights; Productivity; External dependence; Entry barriers;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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