The Investment Climate and the Firm: Firm-Level Evidence from China
50 Pages Posted: 20 Mar 2003
Date Written: March 2003
Abstract
The importance of a country's "investment climate" for economic growth has recently received much attention. A contribution of this paper is to address the general lack of appropriate data for measuring the investment climate and its effects. In this paper we use a new survey of 1500 Chinese enterprises in five cities to more precisely define and measure components of the investment climate, highlight the importance of firm-level data for rigorous analysis of the investment climate, and investigate empirically the effects of this comprehensive set of measures on firm performance in China. Overall, our firm-level analysis reveals that the main determinants of firm performance in China are international integration, entry and exit, labor market issues, technology use, and access to external finance.
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