Does contracting institution affect the patterns of industrial specialization in China?

Qing He (), Chang Xue and Shaojie Zhou

China Economic Review, 2019, vol. 54, issue C, 191-203

Abstract: This study evaluates the importance of contracting institutions as a source of comparative advantage across Chinese provinces. We find that industries differ in their reliance on relationship-specific investments. Provinces with better contracting institutions specialize in industries with more intensive relationship-specific investments. We implement two proxies to measure contracting institutions, including efficiency of the legal system and service of contract enforcement. The empirical results of this study indicate that contracting institutions play a role in shaping the patterns of industrial specialization. Specifically, the service of contract enforcement has the first-order effect on the patterns of industrial specialization in China; by contrast, legal jurisdiction plays a modest role.

Keywords: Contracting institution; Legal rule; Contract service; Industrial specialization; China (search for similar items in EconPapers)
JEL-codes: E22 K12 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:54:y:2019:i:c:p:191-203

DOI: 10.1016/j.chieco.2018.11.003

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