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Table of Contents
The Journal of World Economy 2024, No.3
2024-07-01 15:19:00
The Journal of World Economy 2024, No.3

The Contemporary Significance of Revolutionary Culture: Evidence from the Suppression of Corporate Misconduct by the Long March Spirit
Wu Wuqing, Hong Zhenhan
  Abstract
  Revolutionary culture and spirit are powerful spiritual driving forces for the advancement of the Chinese people. However, few studies explore their impact on corporate activities and decisions. Focusing on the representative revolutionary culture of the Long March spirit, this paper constructs a natural experiment using a series of activities commemorating the 80th anniversary of the Long March victory. Using the difference-in-differences method, it finds that after 2016, there was a significant decrease in corporate misconduct at scenic Long March spots, indicating that the Long March spirit suppressed corporate misconduct. The mechanism test concludes that the Long March spirit mitigates corporate violations by guiding the construction of corporate culture and elevating the expectation of external stakeholders. Further examinations indicate that the type of violation, the age of the executive, the external supervision environment of the company, and the nature of property rights exert a heterogeneous impact on the documented effects. This study provides empirical evidence on the positive impact of the revolutionary culture of the Long March spirit on corporate activities and implications for adhering to a socialist cultural development path with Chinese characteristics.
  Key words
  revolutionary culture / Long March spirit / corporate misconduct / internal control

Keju, Science and Technology: A Human Capital-Based Perspective
Liang Ruobing, Xie Qiyu
  Abstract
  The traditional view of the imperial examination (Keju) system holds that it hindered the development of science and technology throughout China’s history. However, this paper suggests a strikingly different result. First, based on historical panel data from between 580 and 1915, it empirically analyses the influence of the Keju system on ancient science and technology using the fixed-effects (FE) panel model, and shows that there is a significant positive correlation between the number of successful Keju candidates and the number of emerging scientific and technological figures. To address endogeneity issues, it adopts the interaction term of the distance between each region and the Keju locations, and the total number of successful Keju candidates in each period as an instrumental variable, and it conducts a two-stage least squares (IV-2SLS) estimate. The results also confirm previous conclusions, indicating that human capital accumulation shows a strong positive externality. Second, it analyses in depth the main forms of influence of the Keju system and finds that it significantly promotes the emergence of scientific and technological figures, and that the accumulation of emerging talent exerts a significant impact on culture, education and family inheritance. Finally, it attempts to analyse the influence of the Keju system on the scientific and technological talent of the Ming and Qing dynasties, and finds that it weakened during this period, which may have been mainly due to the increasing rigidity of the examination content and methodology. At the same time, it indicates that the disciplinary and innovative structure of scientific and technological development hindered modern scientific and technological progress. All this suggests that a serious mismatch in human capital can clearly have a hampering effect.
  Key words
  imperial examination (Keju) system / science and technology / human capital

Technology Transfer and Corporate High-Quality Innovation
Zheng Manni, Li Wenjing, Tan Youchao
  Abstract
  Technology transfer is a fundamental aspect of scientific and technological innovation. A company’s ability to implement scientific and technological advancements is crucial when replacing traditional growth drivers with new ones powered by innovation-driven developments. Drawing on the establishment of the National Technology Transfer Center (NTTC), this paper adopts a multi-period difference-in-differences (DID) model for rigorous testing and finds that, following the establishment of the NTTC, the number of invention patent applications and citations increased significantly through some mechanisms, such as technology spillover, R&D investment and R&D subsidies. Further analysis reveals that companies’ capacity for innovation was significantly bolstered by technology transfer in areas with a higher technology contract transaction volume, more technology exchange and trading activities and higher marketisation levels. Technology transfer also promoted innovation in companies with basic R&D capabilities. The cornerstone of achieving high-quality innovation is the possession of these core capabilities, which can easily go very far. This paper contributes to enriching the existing literature on technology markets and scientific and technological innovation, providing policy implications on the issue of promoting corporate innovation through the technology transfer mechanism.
  Key words
  corporate innovation / technology transfer / National Technology Transfer Center (NTTC) / technology spillover

Urban Value Chain Functional Division of Labour and Firm Innovation: Evidence from Corporate Patents
Chen Xu, Ji Zhanpeng, Xing Xiaobing
  Abstract
  This paper assesses the urban functional division of labour in various regions by identifying the primary functions of micro-firms in Chinese cities, and then examines the impact and mechanism of the urban functional division of labour on firm innovation based on patent data. The study finds that the urban functional division of labour can significantly promote corporate innovation. The underlying mechanism is that the urban functional division of labour can enhance the integrity and synergy of the industrial chain within the region, increase the stability of corporate supply chains, and expand corporate trade networks. The urban functional division of labour also facilitates the transcendence of business knowledge across administrative boundaries, spilling it over a wider geographical range. The impact of the urban functional division of labour on corporate innovation may also vary due to differences in intercity distance, industry attributes and corporate business coverage. With the improvement in market accessibility and the prominence of central cities, the role of the urban functional division of labour in promoting corporate innovation tends to strengthen. This paper provides guidance for China to cultivate new drivers of corporate innovation by building a regional economic design with complementary advantages.
  Key words
  urban functional division of labour / corporate innovation / industry chain and supply chain / knowledge spillovers

Local Talent Introduction Policies and Corporate Cost Management Decisions
Jin Zhi, Zhang Xinrui
  Abstract
  It has become evident that understanding how to implement local policies to introduce talent into micro-firm behaviour is crucial to promoting high-quality economic development. This paper takes local talent introduction policies as a natural experiment and uses the staggered difference-in-differences (DID) method to examine the impact of these policies on local firms’ intertemporal cost decisions. The research reveals that local talent introduction policies have increased cost stickiness in firms, improved intertemporal cost decision-making, and optimized efficiency in resource allocation in the long term. The main reason for this is that local talent introduction policies promote talent demand competition and improve confidence in the development of local firms, prompting firms to pay greater attention to the creation of long-term incentive mechanisms and investment in long-term values, thus reducing firms’ motivation to reduce their investment in resources when their business sales decline. From the perspective of the micro-firm cost, the study reveals the micromechanism by which local talent introduction policies affect the economic essence, which not only provides theoretical references for the formulation and implementation of talent policies, but also enriches research on human capital theory and cost management.
  Key words
  talent introduction policies / cost stickiness / human capital / high-quality development

The Historical Roots of Social Participation in Public Infrastructure: Evidence from Rural Irrigation Construction
Wang Danli, Chen Binkai
  Abstract
  This study determines the long-term impact of the construction of non-government-managed irrigation facilities throughout history on current villagers’ participation in public affairs. Empirical results indicate that villagers’ participation in the construction and management of irrigation facilities persistently shapes and affects their current participation in public affairs. Using the exogenous shock of state control over nearly all irrigation facilities during collectivization and individuals’ exposure to the policy, as determined by personal birth cohorts, to construct a difference-in-differences model, and employing the primary and secondary terms of historical annual rainfalls as instrumental variables, it is noted that the estimates are consistent with the baseline results. The work also indicates that the rural culture induced by irrigation and trust serves as the underlying action mechanism. These findings contribute to understanding the historical roots of current villagers’ public participation and shed some light on how to modernize rural governance based on the history.
  Key words
  rural governance / villagers' participation / non-government-managed irrigation facilities

Does Affordable Housing Supply Improve Companies’ Human Capital Accumulation?
Cai Qingfeng, Wu Guanchen, Li Dongxu
  Abstract
  This study manually collects over 200000 records of affordable housing construction in China between 2007 and 2020, and empirically tests the impact of affordable housing construction near A-share listed companies’ headquarters on the firms’ human capital accumulation. The findings indicate that for every one standard deviation increase in the supply of affordable housing around the headquarter, the firm’s human capital increases by 9.1%; this effect remains robust after using the instrumental variables method and different fixed-effects (FE) models. The supply of affordable housing helps to mitigate the crowding-out effect of high housing prices on human talent, increasing the company’s attractiveness, motivating companies to increase investment in talent training, which further improves employee job satisfaction, accumulating human capital. Heterogeneity tests show that the impact of affordable housing on corporate human capital is more significant among small companies, private companies, and cities with developed urban rail transit and low commuting pressure. This study fills the gap in empirical research on housing system reform and corporate finance, helps explore the micro-impact of national housing security policy, and provides empirical and policy implications for local governments to improve housing security policies and high-quality regional economic development.
  Key words
  affordable housing / talent factor / human capital accumulation / corporate innovation

Moving Together or Leaving Behind: The Impact of Fiscal Pressure of Destination Cities on the Children of Migrants
Zhang Xunchang, He Wei
  Abstract
  This paper utilizes the data of China Migrants Dynamic Survey from 2012‒2018, taking the Value-Added Tax (VAT) revenue sharing reform between central and local governments as a quasi-natural experiment to examine the impact of fiscal pressure in destination governments on the migratory behavior of children of migrant populations. The study finds that in cities where the fiscal pressure was more heavily impacted by the VAT revenue-sharing ratio reform, there was a significant decrease in the proportion of migrant children who migrated after the reform. Mechanism tests reveal that fiscal pressure inhibits the migration behavior of migrant children by reducing the supply of public services and increasing housing costs. Heterogeneity analysis shows that fiscal pressure has a greater impact on the migratory behavior of girls, and the inhibitory effect of fiscal pressure on children’s migration is mainly found in families with low income, families with employment status as employees, and in cities with higher levels of economic development. The conclusions of the study have important implications for further optimizing public services and coordinating fiscal resources.
  Key words
  fiscal pressure / migrant population / children's migration / VAT revenue distribution reform