The Review of Economics and Statistics 2026
Court Capture, Local Protectionism, and Economic Integration: Evidence from China
Abstract
Court capture in developing countries is pervasive, yet its economic effects remain underexplored. We study a Chinese reform that transferred financial and personnel authority over local courts from local to provincial governments. Exploiting the staggered roll-out, we find a 7.3% decline in local defendants’ win rates against non-local plaintiffs, alongside improved judicial quality. The reform encouraged smaller non-local firms to litigate and attracted non-local investment, potentially raising GDP by 1.9%. Yet favoritism toward politically connected firms and inter-provincial protectionism remain, and centralization itself promotes less qualified judges— revealing both its promise and limits.
- DOI
- 10.1162/rest.a.1820
- Pages
- 1-46
- Language
- en
- Sources
- openalex crossref