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Which types of institutions hinder productivity among private manufacturing firms in China?

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  • Ng, Travis
  • Yu, Linhui

Abstract

Property rights institutions significantly hinder firm productivity but not contracting institutions in China. Weakening property rights institutions by a standard deviation lowers firm productivity by 34.4% of its corresponding standard deviation. Small firms find weak property rights institutions more challenging than big firms do. We address endogeneity using instruments that are both relevant and separable. The results lend micro-level support to the explanation of country-level evidence given in Acemoglu and Johnson (2005), that individuals may get around weak contracting institutions by altering the contract terms but find it harder to mitigate the risk of expropriation.

Suggested Citation

  • Ng, Travis & Yu, Linhui, 2014. "Which types of institutions hinder productivity among private manufacturing firms in China?," China Economic Review, Elsevier, vol. 31(C), pages 17-31.
    • Handle: RePEc:eee:chieco:v:31:y:2014:i:c:p:17-31
    DOI: 10.1016/j.chieco.2014.07.010
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    More about this item

    Keywords

    Institutions; Property rights institutions; Contracting institutions; Labor productivity; Total factor productivity;
    All these keywords.

    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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