<strong>in</strong>tellectual properties? By exam<strong>in</strong><strong>in</strong>g IP rights enforcement <strong>in</strong> different prov<strong>in</strong>ces with<strong>in</strong> the same country, we f<strong>in</strong>d that enforcement <strong>of</strong> <strong>in</strong>tellectual property protection does matter <strong>in</strong> Ch<strong>in</strong>a. High tech firms <strong>in</strong> prov<strong>in</strong>ces with better IP rights enforcement have greater access to external debt (formal and <strong>in</strong>formal). They <strong>in</strong>vest more fund<strong>in</strong>g <strong>in</strong> R&D, and have better tangible results, i.e., more patents and new product sales. To deal with the problem <strong>of</strong> endogeneity, we employ the <strong>in</strong>strumental variable approach by us<strong>in</strong>g the number <strong>of</strong> Christian colleges by 1920 and the presence <strong>of</strong> British concessions <strong>in</strong> the Q<strong>in</strong>g dynasty as the <strong>in</strong>struments. The impact <strong>of</strong> IP rights enforcement is robust to different specifications. Our paper suggests that the enforcement <strong>of</strong> IP rights can contribute to economic growth through the channels <strong>of</strong> f<strong>in</strong>anc<strong>in</strong>g <strong>of</strong> and <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> R&D. Our research design enables us to study the effect <strong>of</strong> the local enforcement <strong>of</strong> IP rights, as enforcement varies across prov<strong>in</strong>ces. International differences <strong>in</strong> the enforcement <strong>of</strong> IP rights must await future efforts. 30
References Allen, F., Qian, J., Qian, M., 2005. Law, f<strong>in</strong>ance, and economic growth <strong>in</strong> Ch<strong>in</strong>a. Journal <strong>of</strong> F<strong>in</strong>ancial Economics 77, 57-116. Anton, J., Yao, D., 2002. The sale <strong>of</strong> ideas: strategic disclosure, property rights, and contract<strong>in</strong>g. Review <strong>of</strong> Economic Studies 69, 513-531. Arrow, K., 1962. Economic welfare and the allocation <strong>of</strong> resources for <strong>in</strong>vention. In: Nelson, R. (Ed.), The Rate and Direction <strong>of</strong> Inventive Activity, Pr<strong>in</strong>ceton University Press, Pr<strong>in</strong>ceton NJ. Ayyagari, M., Demirguc-Kunt, A., Maksimovic, V., 2010. Formal versus <strong>in</strong>formal f<strong>in</strong>ance: evidence from Ch<strong>in</strong>a. Review <strong>of</strong> F<strong>in</strong>ancial Studies 23, 3048-3097. Baker, M., Ste<strong>in</strong>, J., Wurgler, J., 2003. When does the market matter? Stock prices and the <strong>in</strong>vestment <strong>of</strong> equity-dependent firms. Quarterly Journal <strong>of</strong> Economics 118, 969-1005. Benfratello, L., Schiantarelli, F., Sembenelli, A., 2008. Banks and <strong>in</strong>novation: microeconometric evidence on Italian Firms. Journal <strong>of</strong> F<strong>in</strong>ancial Economics 90, 197-217. Crepon, B., Duguet, E., 1997. Estimat<strong>in</strong>g the <strong>in</strong>novation function from patent numbers: GMM on count panel data. Journal <strong>of</strong> Applied Econometrics 12, 243–263. De Haan, L., H<strong>in</strong>loopen, J., 2003. Preference hierarchies for <strong>in</strong>ternal f<strong>in</strong>ance, bank loans, bond, and share issues: evidence for Dutch firms. Journal <strong>of</strong> Empirical F<strong>in</strong>ance 10, 661-681. Du, J., Lu, Y., Tao, Z., 2008. Economic <strong>in</strong>stitutions and FDI location choice: evidence from US mult<strong>in</strong>ationals <strong>in</strong> Ch<strong>in</strong>a. Journal <strong>of</strong> Comparative Economics 36, 1-18. Fan, J., Rui, O., Zhao, M., 2008. Public governance and corporate f<strong>in</strong>ance: evidence from corruption cases. Journal <strong>of</strong> Comparative Economics 36, 343-364. Fan, G., Wang, X., 2001. NERI <strong>in</strong>dex <strong>of</strong> marketization <strong>of</strong> Ch<strong>in</strong>a's prov<strong>in</strong>ces 2000-2001 report. The Economic Science Press, Beij<strong>in</strong>g. Fan, G., Wang, X., 2004. NERI <strong>in</strong>dex <strong>of</strong> marketization <strong>of</strong> Ch<strong>in</strong>a's prov<strong>in</strong>ces 2004 report. The Economic Science Press, Beij<strong>in</strong>g. Fan, G., Wang, X., 2007. NERI <strong>in</strong>dex <strong>of</strong> marketization <strong>of</strong> Ch<strong>in</strong>a's prov<strong>in</strong>ces 2006 report. The Economic Science Press, Beij<strong>in</strong>g. Fan, G., Wang, X., 2010. NERI <strong>in</strong>dex <strong>of</strong> marketization <strong>of</strong> Ch<strong>in</strong>a's prov<strong>in</strong>ces 2009 report. The Economic Science Press, Beij<strong>in</strong>g. 31
Change language