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Do institutions not matter in China? Evidence from manufacturing enterprises

Yi Lu (), Ivan Png and Zhigang Tao ()

Journal of Comparative Economics, 2013, vol. 41, issue 1, 74-90

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.

Keywords: Institutions; Property rights; Productivity; External dependence; Entry barriers (search for similar items in EconPapers)
JEL-codes: O43 P48 D21 L25 O12 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:74-90