Market Facilitation by Local Government and Firm Efficiency : Evidence from China

This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and...

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Bibliographic Details
Main Authors:	Cull, Robert, Xu, Lixin Colin, Yang, Xi, Zhou, Li-An, Zhu, Tian
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO BANK ACCESS TO BANK LOANS ACCESS TO FINANCE ACCESS TO FORMAL FINANCE ACCOUNTANT ACCOUNTING ASSOCIATIONS BANK BANK LOAN BANK LOANS BANK POLICIES BANK POLICY BANKING SYSTEM BANKS BIAS BONDS BORROWERS BORROWING BRIBE BRIBES BUSINESS SUCCESS CAPITAL CAPITAL INVESTMENT CHECK CHECKS COLLATERAL FOR BANK LOANS COLLATERAL REGISTRIES COMMERCIAL CREDIT COMPARATIVE ECONOMICS CONTRACT CONTRACT ENFORCEMENT CONTRACTING COOPERATIVE COOPERATIVE BANKING COORDINATION FAILURE CORPORATE GOVERNANCE CORRUPTION COSTS CREDIT CREDIT CONSTRAINTS CREDIT COOPERATIVES CREDIT MARKET CREDIT MARKETS CREDIT REPORTING CREDIT REPORTING AGENCIES CREDIT REPORTING SYSTEMS DEBT DECENTRALIZATION DEFAULT DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DISCRIMINATION DIVIDENDS DOMESTIC MARKET DUMMY VARIABLE DUMMY VARIABLES ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC RESEARCH ECONOMIC SUCCESS ECONOMIC THEORY ECONOMICS EFFECTS EFFICIENCY EMPLOYEE EMPLOYEES EMPLOYMENT ENDOWMENTS ENTERPRISES ENTREPRENEURSHIP ENTRY BARRIERS EQUIPMENT EQUITY EQUITY INVESTMENT EQUITY INVESTMENTS EXCHANGE EXPENDITURE EXPENDITURES EXPORTS EXPROPRIATION EXTERNAL FINANCE EXTERNAL FINANCING FACE VALUE FACILITATION FARMERS FEES FINANCE FINANCIAL CAPACITY FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SUPPORT FINANCING REQUIREMENT FIRM PERFORMANCE FISCAL POLICY FISCAL REFORM FOREIGN DIRECT INVESTMENT FOREIGN FIRMS FRAUD GDP GDP PER CAPITA GLOBALIZATION GOOD GOODS GOVERNMENT DEBT GOVERNMENT FUNDING GOVERNMENT GRANTS GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT OWNERSHIP GOVERNMENT POLICIES GUARANTEES GUARANTOR HOUSEHOLDS HUMAN CAPITAL INCENTIVES INCOME INCOME LEVEL INCOME LEVELS INCOME TAX INDUSTRIALIZATION INDUSTRY INFLUENCE INFORMAL FINANCE INFORMAL FINANCING INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INFORMATION INFRASTRUCTURE INFORMATION SERVICE INFORMATION TECHNOLOGY INNOVATION INPUTS INSECURE PROPERTY INSTITUTIONAL REFORMS INSTRUMENTS INTEREST INTEREST PAYMENTS INTERESTS INTERNATIONAL BANK INTERNATIONAL TRADE INVESTING INVESTMENT INVESTMENT CLIMATE INVESTMENTS JUDICIAL SYSTEM LABOR LABOR PRODUCTIVITY LACK OF COLLATERAL LACK OF INFORMATION LAND LAND USE LAW LEGAL SYSTEM LENDERS LENDING LOAN DECISIONS LOANS LOCAL BUSINESS LOCAL BUSINESSES LOCAL ECONOMIES LOCAL ECONOMY LOCAL GOVERNMENT LOCAL GOVERNMENTS MACROECONOMICS MANAGEMENT MARKET DEVELOPMENT MARKET ECONOMY MARKET ENVIRONMENT MARKET FAILURE MARKET FAILURES MARKET TRADE MATURE MARKETS MIXED ECONOMY MOTIVATION NEW ENTRANTS ORGANIZATIONS OVERDRAFT OVERDRAFT FACILITIES PATENTS PAYMENT PEOPLE PLANNED ECONOMY PLEDGE POLITICAL ECONOMY POLITICAL STABILITY POOR ACCESS PRICES PRIVATE ENTERPRISE PRIVATE ENTERPRISES PRIVATE INVESTORS PRIVATE PARTIES PRIVATE PROPERTY PRIVATIZATION PRODUCT MARKETS PRODUCTION PRODUCTIVITY PROJECTS PROPERTY PROPERTY RIGHTS PROPERTY RIGHTS PROTECTION PUBLIC POLICY RENT RENTS REPAYMENT REVENUE REVENUES RISK RURAL CREDIT SALES TAXES SAVINGS SAVINGS BANKS SECRETARIES SERVICES SHARE SHAREHOLDERS SHORT-TERM FINANCING SMALL BUSINESS SOCIAL SERVICES STRATEGIES STRUCTURAL CHANGE SUBSIDIES SUPPLIERS SUPPLY TANGIBLE ASSETS TAX BURDENS TAX RATE TAX RATES TAX REDUCTIONS TAXES TELECOMMUNICATIONS THEORY TOTAL FACTOR PRODUCTIVITY TRADE CREDIT TRADE CREDITS TRADING TRAINING TRANSFERS TRANSITION COUNTRIES TRANSITION ECONOMIES TURNOVER URBAN AREA UTILITY VALUE ADDED VENTURE CAPITAL VILLAGE WAGES WORKING CAPITAL government facilitation
Online Access:	http://documents.worldbank.org/curated/en/2013/11/18478923/market-facilitation-local-government-firm-efficiency-evidence-china http://hdl.handle.net/10986/16927

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Summary:	This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and government assistance in arranging loans are positively associated with firm efficiency. Those private firms with weak access to and knowledge of financial, input, and product markets benefit most from such assistance. These patterns are robust across multiple estimation approaches. Case studies of specific types of market facilitation by local governments are provided. The evidence is consistent with the notion that government facilitation can help some firms overcome market failures in the early stages of development. The paper argues that changing fiscal dynamics that forced local governments to become increasingly self-reliant in generating revenue and a government promotion system based on local economic performance compelled these efforts at market facilitation.

Market Facilitation by Local Government and Firm Efficiency : Evidence from China

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