| Magazines |
66, pp. 31–48, 2015 |
| Author | CHERYL LONG, JIN YANG, JING ZHANG |
| Content | We provide firm level empirical evidence that the presence of foreign direct investment (FDI) has positively affected the
institutional quality of the host regions in China. Specifically, Chinese domestic firms located in regions with a higher level of FDI tend
to enjoy a lower level of tax and fee burdens, less arbitrariness in such burdens, as well as better legal protection. To address the potential
issue of endogeneity, we adopt the instrumental variable approach. In addition, we explore the specific mechanisms through which
the institutional impact is materialized and provide various extensions of the empirical findings that offer further support for the
FDI-induced institutional improvement argument. |
| JEL-Codes | |
| Keywords | Asia, China, FDI, institutional impact, legal protection, tax burden |
