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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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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 41 (2013)
Issue (Month): 1 ()
Pages: 74-90

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Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:74-90

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: Institutions; Property rights; Productivity; External dependence; Entry barriers;

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Cited by:
  1. Feenstra, Robert C. & Hong, Chang & Ma, Hong & Spencer, Barbara J., 2013. "Contractual versus non-contractual trade: The role of institutions in China," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 94(C), pages 281-294.
  2. Abigail S. Hornstein, 2013. "The Impact of Local Governance Institutions on Foreign Market Listings: The Case of Chinese Firms," Wesleyan Economics Working Papers, Wesleyan University, Department of Economics 2013-006, Wesleyan University, Department of Economics.
  3. Markus Eberhardt & Zheng Wang & Zhihong Yu, 2014. "From One to Many Central Plans: Drug Advertising Inspections and Intra-National Protectionism in China," CESifo Working Paper Series, CESifo Group Munich 4682, CESifo Group Munich.

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