Economic Statecraft as a Contracting Institution: How the BRI Shapes the Participation of Chinese Firms in GVCs (78543)
Session Chair: Jiwei Wu
Saturday, 25 May 2024 12:15
Session: Session 2
Room: Room 607
Presentation Type: Oral Presentation
This paper investigates how the political connections of corporate boards influence Chinese firms’ participation in global value chains (GVCs) within the context of China’s Belt and Road Initiative (BRI). More than just an economic strategy, the BRI could function as a substitute for inadequate contract enforcement in cross-border economic transactions between China and countries with weak institutions. Using data from Chinese companies listed between 2008 and 2016, and a difference-in-differences (DID) design, we evaluate the impact of the BRI, a policy shock that enhances contract enforcement, and thus encourages Chinese firms' participation in global value chains. The results suggest that, upon the implementation of the BRI in 2013, private firms with political ties to the government became more active GVC participants, thanks to greater support from the Chinese state. The findings imply that the BRI, as an economic strategy, can also function as a mechanism encouraging private firms with political connections to expand globally by reducing transaction costs in cross-border trade activities.
Authors:
Jiwei Wu, University of Macau, China
Weiwen Yin, University of Macau, China
About the Presenter(s)
Ms Jiwei Wu is a University Doctoral Student at University of Macau in Macau
See this presentation on the full schedule – Saturday Schedule
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