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Ownership, investment climate and firm performance

Author

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  • Mary Hallward‐Driemeier
  • Scott Wallsten
  • Lixin Colin Xu

Abstract

The importance of a country's ‘investment climate’ for economic growth has recently received much attention. In this paper we use a new survey of 1,500 Chinese enterprises in five cities to measure more precisely components of the investment climate and their effects on firm performance. Our firm‐level analysis reveals that both ownership and investment climate measures matter for investment, productivity and growth. In particular, firm performance is positively correlated with foreign and domestic private ownership, light regulatory burdens, limited corruption, technological infrastructure and labour market flexibility. In contrast, gains from improving banking access and physical infrastructure are quite limited.

Suggested Citation

  • Mary Hallward‐Driemeier & Scott Wallsten & Lixin Colin Xu, 2006. "Ownership, investment climate and firm performance," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(4), pages 629-647, October.
    • Handle: RePEc:bla:etrans:v:14:y:2006:i:4:p:629-647
    DOI: 10.1111/j.1468-0351.2006.00267.x
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    References listed on IDEAS

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    1. Smarzynska, Beata K. & Shang-Jin Wei, 2000. "Corruption and the composition of foreign direct investment - firm-level evidence," Policy Research Working Paper Series 2360, The World Bank.
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