Court Capture, Local Protectionism, and Economic Integration: Evidence from China
研究中国将地方法院财政人事权上收至省级的改革，发现非本地原告胜诉率下降7.3%，但司法质量提升，吸引非本地投资并可能使GDP增长1.9%，同时政治关联企业偏袒和省际保护主义依然存在。
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.