Corruption, productivity, and import liberalization in China: a firm-level analysis

Lu Jiankun, Bo Meng and Zhang Hongsheng

No 748, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Understanding whether and how corruption impacts firm productivity in China is crucial for promoting good governance of economic development. Based on our econometric model developed with China’s firm-level data, including detailed firm heterogeneity information and provincial records of government official-related corruption, we confirm that corruption acts as “sand” rather than “grease” in the wheels of firm productivity improvement. The hampering effect of corruption on firm productivity is not obvious for state-owned, relatively large-sized, and low productive firms, but it is quite significant for private, relatively small-sized, and high productive ones. More importantly, we find that a firm’s productivity gains from import liberalization are significantly inhibited by corruption. Therefore, if the institutional environment can be improved, firms in China possess great potential—especially private and small-sized firms—to be more efficient or be able to obtain more productivity gains from import liberalization.

Keywords: Corruption; productivity; firm heterogeneity; import liberalization; Chinese economy (search for similar items in EconPapers)
JEL-codes: D73 F14 O24 (search for similar items in EconPapers)
Date: 2019-05
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 748. 2019-05

Downloads: (external link)
https://ir.ide.go.jp/record/50952/files/IDP000748_001.pdf First version, 2019 (application/pdf)

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:jet:dpaper:dpaper748

Ordering information: This working paper can be ordered from
Publication Office, IDE 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545 JAPAN
http://www.ide.go.jp/English/Publish/Order

Access Statistics for this paper

More papers in IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO) Contact information at EDIRC.
Bibliographic data for series maintained by Michitaka Imamitsu ().