This dissertation consists of three integrated papers which apply a new institutional economics (NIE) perspective to understand firm and government choices in contemporary China. Using a fixed effects regression model and a dataset I constructed based on twelve years of data from China’s National Bureau of Statistics, the first paper explores the impact of government discretion upon the formation of domestic private enterprises. The main finding is that as the share of provincial government revenue deriving from discretionary fees increases, the stock of firms in the province decreases.
Investigating data from an existing World Bank survey of 12,400 Chinese industrial firms, the second paper interacts a measure of property rights security with proxy variables indicating the firm’s level of sunk costs. The finding that new fixed asset investment by firms with high sunk costs is systematically more responsive to property rights than that of firms with low sunk costs suggests an important and previously unidentified mechanism by which institutional quality can affect economic performance. Finally, the third paper investigates whether the oft-observed association between
citizen access to information and government responsiveness obtains in an authoritarian setting. Using National Bureau of Statistics data, I posit a collective action mechanism to account for the finding that increasing diffusion of information and communication technologies (ICTs) is associated with a composition of government spending that is more responsive to citizen preferences. In sum, the dissertation is an empirical contribution to the study of how institutions and access to information affect the behaviour of firms and governments in contemporary China. Beyond estimating the
magnitude of these effects, each paper makes a theoretical contribution to our understanding of how institutions matter for development. The dissertation’s broad conclusion is that China’s development experience supports the conventional wisdom of an NIE perspective on development.