Can Contract Enforcement Efficiency Affect TFP Growth?——Empirical Study Based on Regional Industrial Samples in China
Considering the huge differences in TFP among industries in different regions of China,it is crucial to explore the underlying reasons.By constructing an economic model that includes incomplete contracts and technological innovation,this study finds that the efficiency of contract enforcement is positively correlated with the growth rate of TFP,and the degree of contract intensity will reinforce this relationship.The empirical study based on the industrial and regional panel data of China from 2000 to 2010 shows that the higher the efficiency of regional contract enforcement,the faster the growth rate of TFP in its industry,and the more obvious the effect is in the industry with greater contract intensity.The conclusions remain robust after controlling relevant variables of TFP and the endogeneity of contract enforcement efficiency.Meanwhile,it is found that an important way to improve the production efficiency of the industry is through technological innovation.The research in this paper provides a new perspective for understanding the relationship between legal environment and productivity changes.
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