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Contractual versus non-contractual trade: The role of institutions in China

Author

Listed:
  • Feenstra, Robert C.
  • Hong, Chang
  • Ma, Hong
  • Spencer, Barbara J.

Abstract

Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.

Suggested Citation

  • 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, vol. 94(C), pages 281-294.
  • Handle: RePEc:eee:jeborg:v:94:y:2013:i:c:p:281-294
    DOI: 10.1016/j.jebo.2013.08.009
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    References listed on IDEAS

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    Cited by:

    1. Chakraborty, Pavel, 2016. "Judicial quality and regional firm performance: The case of Indian states," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 902-918.
    2. Wang, Yongjin & Wang, Yanling & Li, Kunwang, 2014. "Judicial quality, contract intensity and exports: Firm-level evidence," China Economic Review, Elsevier, vol. 31(C), pages 32-42.
    3. Sandrine NOBLET & Antoine BELGODERE, 2016. "Complexity Of Production Processes And The Need For Proximity," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 5-19.
    4. repec:eee:jcecon:v:45:y:2017:i:4:p:809-826 is not listed on IDEAS
    5. Ng, Travis & Yu, Linhui, 2014. "Which types of institutions hinder productivity among private manufacturing firms in China?," China Economic Review, Elsevier, vol. 31(C), pages 17-31.
    6. Ge, Ying & Lai, Huiwen & Zhu, Susan Chun, 2015. "Multinational price premium," Journal of Development Economics, Elsevier, vol. 115(C), pages 181-199.
    7. Zhao Chen & Sandra Poncet & Ruixiang Xiong, 2016. "Inter-industry relatedness and industrial-policy efficiency: Evidence from China's Export Processing Zones," Working Papers 2016-02, CEPII research center.
    8. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, Elsevier.
    9. Antonio Ciccone & Elias Papaioannou, 2016. "Estimating Cross-Industry Cross-Country Interaction Models Using Benchmark Industry Characteristics," NBER Working Papers 22368, National Bureau of Economic Research, Inc.
    10. Li, Xibao, 2015. "Specialization, institutions and innovation within China's regional innovation systems," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 130-139.
    11. repec:eee:inecon:v:110:y:2018:i:c:p:50-62 is not listed on IDEAS
    12. Marcus Noland & Stephan Haggard, 2012. "Networks, Trust, and Trade: The Microeconomics of China–North Korea Integration," Working Paper Series WP12-8, Peterson Institute for International Economics.
    13. Antonio Accetturo & Andrea Linarello & Andrea Petrella, 2017. "Legal enforcement and Global Value Chains: micro-evidence from Italian manufacturing firms," Questioni di Economia e Finanza (Occasional Papers) 397, Bank of Italy, Economic Research and International Relations Area.
    14. Sheng, Liugang & Yang, Dennis T., 2011. "Speeding Up the Product Cycle: The Role of Host Country Reforms," IZA Discussion Papers 6054, Institute for the Study of Labor (IZA).
    15. Sheng, Liugang & Yang, Dennis Tao, 2016. "Expanding export variety: The role of institutional reforms in developing countries," Journal of Development Economics, Elsevier, vol. 118(C), pages 45-58.
    16. Dimitra Petropoulou & Xavier Cirera & Dirk Willenbockel, 2013. "The Determinants of Outward Processing: Evidence from Offshoring Intermediates by the European Union," Working Paper Series 5413, Department of Economics, University of Sussex.

    More about this item

    Keywords

    Institutions; Contracts; Exports; Processing trade; Foreign firms;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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