New Books In Economics

How do states build vital institutions for market development? Too often, governments confront technical or political barriers to providing the rule of law, contract enforcement, and loan access. In From Click to Boom: The Political Economy of E-Commerce in China (Princeton, 2024) Lizhi Liu suggests a digital solution: governments strategically outsourcing tasks of institutional development and enforcement to digital platforms—a process she calls “institutional outsourcing.” China’s e-commerce boom showcases this digital path to development. In merely two decades, China built from scratch a two-trillion-dollar e-commerce market, with 800 million users, seventy million jobs, and nearly fifty percent of global online retail sales. Contrary to conventional wisdom, Liu argues, this market boom occurred because of weak government institutions, not despite them. Gaps in government institutions compelled e-commerce platforms to build powerful private institutions for contract enforcement, fraud detection, and disput