ABSTRACT This paper explores the role of informal institutions in shaping China’s export dynamics by examining dialect diversity as a proxy for regional cultural variation. Extending a heterogeneous firm trade model, we show theoretically that dialect diversity exacerbates market segmentation, which in turn promotes export expansion. Empirical evidence from matched firm-level customs and financial data supports the mechanism. The effect arises not from proactive innovation or competitiveness gains, but from firms’ passive adaptation to fragmented domestic markets to avoid costs associated with institutional frictions. The findings underscore the dual role of dialect culture – both as a barrier and as an adaptive force – and highlight the need to balance linguistic unification with cultural preservation to sustain high-quality export growth.

ABSTRACT Forest conservation remains a major challenge in many developing countries, where institutional barriers contribute to deforestation and persistent poverty. This paper examines a forest tenure reform that devolved forest rights from village collectives to individual households and its impact on forest outcomes. Using two waves of nationwide village and household surveys, satellite imagery on land cover and Enhanced Vegetation Index (EVI), and village-level meteorological records over a 10-year period, we evaluate the reform’s effects on forest coverage and quality. The results show that transferring tenure rights to households significantly increased forest coverage in villages. However, improvements in forest quality—measured by vegetation density (EVI)—emerge more slowly. The initial expansion of forest area through newly planted trees temporarily lowers average vegetation density, but canopy density increases as trees mature over time.

ABSTRACT This paper assesses whether the China – Pakistan Economic Corridor (CPEC) makes economic sense for Pakistan, the extent of its progress, and how its developmental benefits can be maximized. Using a mixed-methods approach – including primary document analysis, 30 field visits in China and Pakistan, 144 interviews, and a survey of 209 respondents – it examines the structural reasons behind the slow industrial take-off of CPEC’s Special Economic Zones. Applying the Growth Identification and Facilitation Framework of New Structural Economics, the study finds that while CPEC has delivered significant gains in energy and infrastructure connectivity, Pakistan has yet to fully leverage its comparative advantages. China emerges as an effective lead country whose experience can support Pakistan’s industrial upgrading. The paper argues that Pakistan must reorient CPEC toward sectoral prioritization, targeted industrial collaboration, and better alignment with its factor endowments to achieve sustained structural transformation.

ABSTRACT This paper investigates how financial incentives influence household recycling behavior using a randomized survey experiment. Participants were assigned to hypothetical recycling reward (RRS) and deposit return (DRS) schemes with varying incentive levels, and their willingness to recycle was measured through a multiple price list with varying travel time to the recycling facility. We find that consistent with the motivation crowding theory, a small reward (2 Baisa) has no effect and can even reduce recycling willingness; while a larger reward (30 Baisa) significantly increases recycling willingness. Contrary to loss-aversion predictions, a deposit of the same magnitude (30 Baisa) has no impact, while a large deposit (100 Baisa) performs similarly to a reward scheme of 30 Baisa. We propose an environmental tax-salience conjecture to explain these patterns. The findings offer practical implications for designing effective recycling policies in China and other emerging economies.

ABSTRACT This study explores the influence of institutional quality on the relationship between China’s outward foreign direct investment (OFDI) and debt sustainability in 34 Belt and Road Initiative (BRI) recipient countries from 2013 to 2022. Using a Fiscal Reaction Function with dynamic panel threshold regression, it examines whether institutional quality impacts fiscal outcomes. The findings indicate that countries with weaker institutional frameworks face heightened fiscal risks when large capital inflows occur under the BRI, potentially leading to unsustainable debt levels. Conversely, stronger institutional quality facilitates more effective debt management. These results highlight the crucial role of institutional quality in determining whether BRI financing fosters sustainable economic growth or exacerbates debt vulnerabilities. Additionally, the study provides empirical evidence that contributes to ongoing discussions about debt-trap diplomacy and mutual development.

ABSTRACT Using 5,946 merger and acquisition (M&A) deals completed by Chinese firms, we explore the relationship between CEO risk preference and M&A payment method under the dual background of external pressure (environmental regulation) and intrinsic motivation (improving green innovation capabilities). We find that: (1) There is a positive relationship between the acquirer’s CEO risk preference and stock payments; (2) Environmental regulation in the acquirer’s location and the acquirer’s performance feedback on green innovation positively moderate the above relationship. Further analysis shows that: (1) Firms are reluctant to use stock when targeting at developed regions; (2) Strong green innovation performance feedback weakens the effect of environmental regulation; (3) Greater CEO’s birthplace-target distance reduces the impacts of risk preference and green innovation performance feedback; (4) Effects vary by firm state-ownership and region. This study reveals the possible goals and choices of emerging economy firms in M&As under complex environmental issues.

ABSTRACT We use a simple model to investigate how policy-makers invest resources in a combination of coercion and buying off between two social groups, i.e. elite and mass, so as to maximize loyalty generation from them to secure the regime survival. The model elite are politically powerful, but the masses are more economically efficient. We show that, regardless of economic efficiency, as long as the regime survival counts more on buying the allegiance of the inefficient elite than that of the efficient mass group, a considerable misallocation will be inevitable. The model also reveals how the government’s strategy toward one will also be affected by changes in the parameters regarding the other group. In contrast to the popular view that efficiency-enhancing policies and institutions are hard to implement due to the resistance from interest groups, our analysis suggests that bad policies can be intentionally adopted by decision-makers, even if they result in misallocations.

ABSTRACT The pursuit of dynamic and inclusive economic development is a common goal for countries worldwide. The 2024 Nobel laureates in Economics, Acemoglu, Johnson, and Robinson, posited that institutions are endogenous and are the fundamental determinant of development success or failure. However, we argue that their hypothesis does not align with cross-sectional and historical evidence. From the perspective of New Structural Economics, this paper contends that a comparative-advantage-following development strategy is the key to an economy’s dynamic growth and equitable income distribution. Institutions, including aspects such as corruption, openness, and expropriation risks, are themselves endogenous to the choice of development strategies. Our proposition is supported by cross-country empirical evidence. Finally, the paper points out that for a developing country’s government, adopting a comparative-advantage-following development strategy is more conducive to guiding the country’s economic development than adopting an inclusive institution as proposed by Acemoglu, Johnson, and Robinson. This is because an exogenously imposed institution is unlikely to be effective.

ABSTRACT New Structural Economics emphasizes the critical role of infrastructure in supporting industrial upgrading and economic development. The theory highlights that the factor endowment structure endogenously determines the industrial structure with latent comparative advantage and the corresponding infrastructure structure that transform comparative advantage from latent to actual at a given time. To realize the industrial upgrading and economic development in an economy, it is essential to implement a stage-dependent infrastructure investment policy:(1) the scale of infrastructure investment should be higher in the early stages of development and gradually decrease as the economy develops; (2) infrastructure should be upgraded over time to align with changes in the factor endowment structure and industrial upgrading. Additionally, during economic crises, infrastructure construction tends to be more cost-effective, which can help address barriers to industrial upgrading and support long-term growth.

ABSTRACT This study utilizes Chinese micro-level data to analyze the effects of air pollution on respiratory diseases, while simultaneously accounting for endogeneity and nonlinear responses. Related past studies have primarily focused on air pollution’s linear effects. We find that air pollution increases the probability of respiratory diseases, and as pollution levels rise, the negative marginal costs intensify. Thus, not accounting for nonlinear responses underestimates the impacts of air pollution. In particular, we find very large marginal pollution effects on respiratory disease at high concentrations – e.g. moving to the 90th percentile of pollution levels from the 10th percentile leads to a 42.3% increase in Chinese respiratory diseases. Additional analysis reveals that the negative air pollution effects vary across different populations, which has implications for regulatory-policy design. These findings suggest that stricter pollution policies in developing countries have widespread health benefits in improving quality-of-life that exceed estimates extrapolated from developed-country studies.