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Institutional Impact of Foreign Direct Investment in China

Id：2270 Date：20160221 Status： ClickTimes：
作者CHERYL LONG, JIN YANG, JING ZHANG
正文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：
关键词：Asia, China, FDI, institutional impact, legal protection, tax burden
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