Do economic institutions matter for trade liberalization? Evidence from China’s Open Door Policy

Tong Fu

Research in International Business and Finance, 2021, vol. 55, issue C

Abstract: Trade liberalization can promote export by inducing better resource allocation and more advanced technologies. Although the literature emphasizes the mechanism of geographic proximity, this paper identifies an institutional effect. Using infant mortality rate as an instrument that is irrelevant to export and geographic effects, we confirm that the openness due to China’s Open Door Policy promotes firm exports. We further document that the positive relationship between openness and firm exports is mediated by property rights protection and corporate autonomy, either of which reflects institutional quality at the constraint on the government’s strategic behavior. In particular, our estimates are robust to different samples, different estimation methods, and endogeneity bias.

Keywords: Trade liberalization; Firm exports; Property rights protection; Corporate autonomy (search for similar items in EconPapers)
JEL-codes: F13 H11 P26 P33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:55:y:2021:i:c:s0275531920309375

DOI: 10.1016/j.ribaf.2020.101330

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