Economic growth is below what would be needed to resume rapid convergence to average OECD living standards. On-going efforts to improve the business climate are laudable, but need to be widened and strengthened. Much progress has been achieved in reducing red tape, but it is only recently that...

This paper develops a self-enforcing contract model to show that better economic fundamentals can help when there is weak rule of law-but with order-to attract foreign direct investment, whereas lowering taxes does not necessarily help. Using a cross-region Chinese dataset, the analysis finds...