Research On The Impact Of Corporate Law In Late Qing Dynasty On Early Industrialization In Modern China

The value of this paper is the re-discussion about transplanting efficiency of institutions through the re-investigation on corporate law issued in late Qing dynasty about its transplanting practice and efficiency.Late Qing dynasty tried to issue corporate law to promote corporation around the country,with the purpose to accelerate the development of industries and reach the prosperity of economy.However,the result was not as positive as expected.So why the advanced corporate law had not played a positive role as it was applied to China in late Qing dynasty?Since China is so large,then the implementation efficiency of the corporate law would be negatively the same everywhere? These questions are the start point of the research of this paper.Based on the historical fact and the theory of institutional change raised by Douglass North,this paper constructed a logic model about how institution works on the industrialization process.This model tells that the corporate law popularize the application of corporation through reducing the transaction cost of setting up and running corporation in order to win the potential economic opportunities,which objectively deepen the labor division and spur the development of industrialization.In this model,there are two factors which are government enforcement ability and the local informal restraints that will influence the transplantation and application of corporate law,and economic opportunity will be the factor through which corporate law works on industrialization.So the enforcement ability of government and informal restraints are the moderator variables while the economic opportunity is the mediator variable during the whole process.As for the case of corporate law in late Qing dynasty,considering the great differences of informal restraints and economic opportunities between treaty ports and non-ports area,it is expected that the implementation of corporate law in treaty ports will be much more efficient from that in non-ports area.The economic vitality and the informal institutional change in treaty ports may make it more suitable for the application of corporate law and its work on industrialization.To test the hypothesis,the two-way fixed-effect model was employed in this paper to evaluate the influences of corporate law on early industrialization,and the causal regression test method was used to explore the inner mechanism of how corporate law works on industrialization.This paper finds that the difference in industrialization degree between treaty ports and non-ports area become much larger after the issue of corporate law.Compared with non-ports area,treaty ports had received positive and impressive push on industrialization from corporate law.However,due to the limited number of treaty ports and their limited share of GNP,the effectiveness of corporate law in treaty ports cannot change the overall judgement.But the research and exploration of the implementation results and working mechanism in these “small”places will be of “big”theoretic significance and realistic inspiration,which demonstrated that whether a transplanted institution can survive and play a role,does not depend on the will of power or the idealistic design of elites,but finally on the needs of the society and the interaction between formal institutions and informal institutions together with other social factors.About the re-discussion of implementation efficiency of corporate law,this paper has made some innovations based on previous researches.First of all,previous research about corporate law in modern China usually employed historical narrative to analyse the background,issuing process,content and influences of corporate law,but the theory frame of institutional economics was rarely used to analyse it.So this paper tries to introduce the theory of institutional change raised by Douglass North to analyze the transplantation of the first corporate law in Chinese history and its influence on the early industrialization in modern China.Secondly,usually the conclusion and evaluation about the implementation effect of corporate law in late Qing dynasty is made on the whole of China,or individually about some cases,very few research was carried out to find the regional differences of the effect.Considering the special informal restraints and relatively rich economic opportunities in treaty ports,which may result in different implementation results for the corporate law,this paper aims to investigate the differences to deepen the understanding of inner mechanism of institution transplantation.Thirdly,due to the limited reliable data,previous research about corporate law usually was carried out with normative analysis and qualitative analysis,some together with data statistics and game model,very few were with positive analysis and quantitative analysis.This paper collects and sorts out enough data,employs the two-way fixed-effect model to assess the differences of effect of corporate law on industrialization between treaty ports and other areas,and explore the inner working mechanism with causal regression analysis,with the aim to prove the theoretic hypothesis with empirical analysis.The exploration and research on the implementation efficiency of corporate law in this paper tries to prove that even in the country with long history and culture accumulation,transplanted institutions can also integrate into local institutional system to play a positive role,and the key is that the formal institutions are compatible to informal restraints.Both absorbing local rules and transplanting foreign institutions are the necessary path to the institutional development.The most important thing about transplanting institutions is to integrate the principles and paradigm of foreign institutions with local culture and norms,to help the transplanted rules change from as rules to as institutions and as cultures.