Do institutions not matter in China? Evidence from manufacturing enterprises

Lu, Yi, Png, Ivan P.L., and Tao, Zhigang—Do institutions not matter in China? Evidence from manufacturing enterprises This study addresses the apparent puzzle that China achieved spectacular economic performance despite weak institutions. Using a World Bank survey of 1566 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 heterogeneous response estimation further established the causal impacts of property rights protection on enterprise productivity. These findings were robust to various controls, exclusion of outliers, and alternative measures of productivity and property rights protection. Journal of Comparative Economics 41 (1) (2013) 74–90. Department of Economics, National University of Singapore, Singapore; Faculty of Business and Economics, University of Hong Kong, Hong Kong. 2011 Association for Comparative Economic Studies Published by Elsevier Inc. All rights reserved.