The Cost of Poor Institutions: Estimations Based on Chinese Firm Flows

Xiaolu Liu and Jidong Yang

Emerging Markets Finance and Trade, 2022, vol. 58, issue 5, 1308-1319

Abstract: This study estimates the cost of poor institutions using cross-provincial firm investments in China based on its unique land policies. We find that provinces with better institutions attract more firm investment and that institutions are substitutive with land price distortion. Firms with high (low) labor productivity move primarily between provinces with better (inferior) institutions. This stratification effect suggests that a poor institutional environment has dynamic costs, hindering technology diffusion from provinces with good institutions to those with poor institutions. The results imply that it is difficult to achieve industrial upgrades by factor price distortion rather than institutional environment improvements.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2021.1873126 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:58:y:2022:i:5:p:1308-1319

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2021.1873126

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().