Do Institutions Not Matter in China? Evidence from Manufacturing Enterprises

38 Pages Posted: 6 May 2008 Last revised: 12 Mar 2010

See all articles by Yi Lu

Yi Lu

School of Business, University of Hong Kong

Ivan P. L. Png

National University of Singapore (NUS)

Zhigang Tao

The University of Hong Kong - School of Business

Date Written: February 20, 2010

Abstract

This study addresses the apparent puzzle that China achieved spectacular economic performance despite weak institutions. Using a World Bank survey of 1,566 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 the difference-in-differences estimation further established the causal impacts of property rights protection on enterprise productivity. These findings were robust to various controls, outliers, and alternative measures of productivity and property rights protection.

Keywords: institutions, law, property rights, China, growth

JEL Classification: D23, K12, L60, O12, O53

Suggested Citation

Lu, Yi and Png, Ivan P. L. and Tao, Zhigang, Do Institutions Not Matter in China? Evidence from Manufacturing Enterprises (February 20, 2010). Available at SSRN: https://ssrn.com/abstract=1129647 or http://dx.doi.org/10.2139/ssrn.1129647

Yi Lu

School of Business, University of Hong Kong ( email )

Rm 730, Meng Wah Complex
Pokfulam Road
Hong Kong
Hong Kong
(852) 2241-5245 (Phone)
(852) 2858-5614 (Fax)

HOME PAGE: http://www.fbe.hku.hk/~luyi

Ivan P. L. Png

National University of Singapore (NUS) ( email )

Singapore, 117543
Singapore
+65 6516-6807 (Phone)

HOME PAGE: http://sites.google.com/site/iplpng/

Zhigang Tao (Contact Author)

The University of Hong Kong - School of Business ( email )

Meng Wah Complex
Pokfulam Road
Hong Kong
China
(852) 2857-8223 (Phone)
(852) 2858-5614 (Fax)

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