Contract Institutional Quality And Industry Growth

Industry growth is the foundation of a national economic development, and also show the economic strength. The rapid growth of industries in different regions will inevitably lead to the unbalanced development of the region, while the gap between industry growth has also attracted the attention of experts and scholars. The existing literatures from the the perspective of resource area endowments, market competition, industry specialization and externalities, government behavior and financial development to study industrial growth. And with the industry specialization degree and the product of global integration, the deepening of division of labor within, from product design, raw material processing production, assembly and packaging, transportation and sales of various processes to make a product transfer from producers to consumers. Which can be seen, the process of industrial development is a combination of a contract to be implemented, that industrial growth no matter what stage of the process in the industrial division, will likely be accompanied by the implementation of the inter-enterprise contract. Which needs a system arrangement, as a link between investment and corporate bond in industry growth. The paper from incomplete contract studies the industry growth, and expandes the empirical literature of industrial growth, promotes a national or regional economic development of the institutional environment system and industrial comparative advantage. So this study has great significance and value.This article is based on a paper under the framework contract theory, new institutional economics and industrial development theory, mainly to explore the implementation of incomplete contracts will affect the industry growth. First, incomplete contract to build a theoretical model and investment. Secondly, using survey data from the World Bank. Specific studies master basic conclusions are as follows:First, the summary of existing literature on contract theory, industrial growth, namely theoretical groundwork for this article. With respect to the existing literature, highlighting the important factors contract quality system in the industry growth. Based on incomplete contract theory literature and Yang and Nie (2006), Nie (2009) point of view to build a basic incomplete contract theory to analyze, the conclusions show that incomplete contracts will lead to business investment invalidity thereby affecting the industrial growth.Second, Using the survey data of World Bank’s "Doing Business in China (2008)," we test the relationship between the quality of contract and industry growth. Result indicates that, contract institutional quality, contract and industrial contract system dependent interaction term industrial lease at the1%significance level significantly, the better the quality of contract institution the more conducive to promoting the growth of the industry, and for the implementation of the contract depends on the industry in the contract system, the higher the quality the faster growth of regional industry, which is consistent with the theoretical basis of the results of the analysis in this article and other scholars estimation test results. Further, law efficiency affect contractual quality system thereby affecting the industry growth, found the interaction term indicators of quality and rule of law in the efficiency of regional contract system at1%significance level is significantly positive, indicating that the higher law efficiency of the region, the more favorable contract system improve the quality of which can suppress the "Hold Up" risk, then there is conducive to enterprise investment and industrial growth.