A Study On The Contract Enforcement And Regional Exports In China

We discuss the differences in chinese regional export scale and structure from the contract enforcement aspect.The micro-mechanism of Chinese regional unbalanced exports is studied in the paper. We present a simple theoretical model, by extending Grossman(1981), Ranjan and Lee (2007) to show why contract enforcement may be important. The imperfect enforcement of contracts reduces the revenue of exporters, which will reduce the scale of regional export. Further, the region with better contract enforcement occupies comparative advantage on the industries with higher contract density.Empirically, we found significant evidence for the conclusions presented by our theoretical model. By taking advantage of Chinese regional export data during 2004 to 2007, we found that the quality of contract enforcement plays a vital role in the regional unequal export by controlling the regional difference of physical capital,human capital, resource endowments and FDI.The policy connotation is as follows.The improvement of contract enforcement is meaningful for export expansion and structural optimization.For one thing, the improvement of contract enforcement enlarge the scale of export; For another thing, the improvement of contract enforcement will promote the upgrading of export structure.