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Which types of institutions hinder productivity among private manufacturing firms in China?

Travis Ng () and Linhui Yu

China Economic Review, 2014, vol. 31, issue C, 17-31

Abstract: Property rights institutions significantly hinder firm productivity but not contracting institutions in China. Weakening property rights institutions by a standard deviation lowers firm productivity by 34.4% of its corresponding standard deviation. Small firms find weak property rights institutions more challenging than big firms do. We address endogeneity using instruments that are both relevant and separable. The results lend micro-level support to the explanation of country-level evidence given in Acemoglu and Johnson (2005), that individuals may get around weak contracting institutions by altering the contract terms but find it harder to mitigate the risk of expropriation.

Keywords: Institutions; Property rights institutions; Contracting institutions; Labor productivity; Total factor productivity (search for similar items in EconPapers)
JEL-codes: P48 L25 K40 O12 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.chieco.2014.07.010

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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