Speaker’s bio: Song Yuan is an assistant professor in the School of Economics at Zhejiang University. He holds his Ph.D. in Economics from the University of Warwick. His research interests lie in development economics, world economy, political economy, and economic history. His works have been published on Journal of Economic History, Journal of Development Economics, and Journal of Comparative Economics.

Abstract: This paper examines how domestic institutional shocks shape overseas economic activities, using China’s anti-corruption campaign and construction contracting in Africa. By assembling a novel project-level dataset for 31 Chinese provinces and 54 African destination countries from 2009 to 2018 and drawing insights through conducting field interviews, we find that stronger enforcement is followed by a persistent contraction in overseas contracting, concentrated among state-owned enterprises (SOEs). A triple-difference design shows a relative contraction in markets with pre-existing contracting ties. Firm level analysis reveal that firms undertake fewer projects and withdrawing from established destinations. The decline is larger in countries with weaker corruption control, while firms shift toward larger projects, consistent with a mechanism in which heightened accountability discourages discretionary contracting decisions following the campaign. We further document that Non-SOEs expand in established markets as SOEs retrench in especially countries with pre-existing ties. These findings reveal a new channel through which domestic institutional shocks propagate into economic behavior in frontier markets.