Governance Infrastructure and Location of Foreign Direct Investment in the People’s Republic of...

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    IGKO Vh{noef \i|j{ Sj{ojs

    Fhtj{eiecj Oed{isw{zcwz{j iegBhciwohe hd Dh{jofe Go{jcwOetjswmjew oe waj \jh|bjs[j|zkboc hd Caoei

    @oi Aj" Hbotj{ M% [zo" iegQoihbjo Pai

    Eh% 3;7Ehtjmkj{ ;

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    Waj Vh{noef \i|j{ sj{ojs os i chewoeziwohe hd waj dh{mj{b eimjg Gosczssohe \i|j{ sj{ojs>waj ezmkj{oef hd waj |i|j{s chewoezjg vowahzw oewj{{z|wohe h{ caiefj% IGKOs vh{noef|i|j{s {jdbjcw oeowoib ogjis he i wh|oc ieg i{j |hswjg heboej dh{ gosczssohe% IGKO jechz{ifjs{jigj{s wh |hsw wajo{ chmmjews he waj mioe |ifj dh{ jica vh{noef |i|j{ !fotje oe wajcowiwohe kjbhv/% Shmj vh{noef |i|j{s mi gjtjbh| oewh hwaj{ dh{ms hd |zkbociwohe%

    Szffjswjg cowiwohe0

    Aj" @%" H% M% [zo" ieg Q% Pai% ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    Iksw{icw

    Swiegi{g ejhcbissocib wajh{ |{jgocws waiw ci|owib sahzbg dbhv d{hm {oca wh |hh{ chzew{ojs%Ahvjtj{" Bzcis !9??

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    Chewjews

    9% Oew{hgzcwohe %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 3;% Dh{jofe Go{jcw Oetjswmjew oe waj \[C %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% :3% Bowj{iwz{j [jtojv %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 6

    3%9 Waj Bzcis \i{ighq %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 63%; Gjwj{moeiews hd DGO %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% ?

    7% Mjwahghbhf %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 9

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    9% OEW[HGZCWOHE

    Oe swiegi{g ejhcbissocib jchehmoc wajh{" waj biv hd gomoeosaoef {jwz{es om|bojs i aofaj{mi{foeib |{hgzcw hd ci|owib oe i bjss |{hgzcwotj h{ |hh{j{ jchehm" vaoca wjegs wh go{jcw

    ci|owib dbhvs d{hm {oca jchehmojs wh |hh{ jchehmojs% Oe i d{jj ieg chm|jwowotj ci|owibmi{njw" waos w{jeg vobb chewoezj zewob waj goddj{jecj kjwvjje waj wvh jchehmojs gosi||ji{s%Ahvjtj{" Bzcis !9??

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    {jfohes oe waj \[C" vaoca os |i{woibb chesoswjew vowa waj gjj|j{ tj{sohe hd waj Bzcis|i{ighq% Waj Caoejsj fhtj{emjew |{htogjs mie oecjewotjs wh jechz{ifj DGO" ieg wajdhczs hd fhtj{emjew |hboc ais f{igzibb saodwjg d{hm chiswib {jfohes !waj {ocaj{ {jfohes/ whoebieg {jfohes !waj |hh{j{ {jfohes/% Wh {zbj hzw waj |hssokobow waiw waj Bzcis |i{ighq osg{otje k waos |hboc dicwh{" vj |i{wowohe hz{ sim|bj oewh |{j ieg |hsw-;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    :

    ;% DH[JOFE GO[JCW OETJSWMJEW OE WAJ \[C

    Waj \[C fhtj{emjew bizecajg ie h|je-ghh{ |hboc oe 9?6?" ieg" szksjyzjewb" hej hd wajmioe djiwz{js hd waj chzew{s jchehmoc biegsci|j ais kjje ie z|sz{fj oe dh{jofe ci|owiboedbhvs% Icch{goef wh \hecjw !;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    Ow cie ibsh kj sjje waiw DGO os ibbhciwjg zejtjeb ic{hss |{htoecjs% Fziefghef bjigs wajhwaj{s" iww{icwoef ie itj{ifj hd eji{b ZS'99 kobbohe |j{ ji{ htj{ waj |j{ohg% Waos os bi{fjbgzj wh waj |{htoecjs wa{jj S|jcoib Jchehmoc Phejs" is waj cjew{ib fhtj{emjew hddj{ss|jcoib oecjewotj |hbocojs wh iww{icw DGO wh wajsj phejs% Fziefghef os ibsh igtiewifjg k owsfjhf{i|aocib bhciwohe% Ow os ig`icjew wh Ahef Nhef" Caoei> ieg Miciz" vaoca i{j waj mi`h{shz{cjs hd DGO oe waj mioebieg% @oiefsz \{htoecj os waj sjcheg bi{fjsw {jco|ojew hd DGOoedbhvs" iww{icwoef ie ieezib itj{ifj hd mh{j waie ZS'1 kobbohe% Waj sjcheg woj{ hd |{htoecjsoe wj{ms hd DGO oedbhvs" vaoca oecbzgjs Ajkjo" Boiheoef" ieg Saieghef" iww{icws heb aibd wajimhzew hd DGO {jcjotjg k waj wvh bjigoef |{htoecjs% Mie vjswj{e oebieg |{htoecjs" szcais Fzopahz" _zeeie" ieg Saiieqo" {jcjotj tj{ bowwbj DGO%

    Dofz{j ;0 Itj{ifj DGO ic{hss |{htoecjs

    Waos dofz{j sahvs itj{ifj DGO d{hm 9??: wh ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    waj dhczs hd ieg caiefjs oe DGO |hboc aitj sai|jg DGO oedbhvs ieg vajwaj{ waos |hboc owsjbdos waj cizsj hd waj Bzcis |i{ighq oe waj \[C%

    Dofz{j 30 Chm|i{oshe hd DGO f{hvwa oe jiswj{e ieg vjswj{e {jfohes hd waj \[C

    Waos dofz{j |{jsjews i chm|i{oshe hd DGO oedbhvs oe jiswj{e chiswib {jfohe hd waj \[C ieg vjswj{e oebieg {jfohe hdwaj \[C soecj ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    1

    |{hgzcwotj sw{zcwz{j hd ie jchehm" szca is wjcaehbhfocib gjtjbh|mjew" goddj{jecjs oeazmie ci|owib" fhtj{emjew |hboc ieg oeswowzwoheib sw{zcwz{j" cie cizsj mi{foeib {jwz{es heci|owib wh ti{ !Bzcis 9?? Noef ieg [jkjbh 9??3> [ipoe ieg _zje 9??7> Fhmmj 9??3/%Waj sjcheg scahhb dhczsjs he om|j{djcwohes oe oewj{eiwoheib ci|owib mi{njws !Bzcis 9??Fj{wbj{ ieg [hfhdd 9?? Fh{ghe ieg Khtjekj{f 9??4/% Mi{njw diobz{j ieg |hbowocib {osn njj|i bi{fj imhzew hd ci|owib hzw hd mhsw gjtjbh|oef chzew{ojs" jtje wahzfa szca ci|owib vhzbgje`h aofaj{ {jwz{es% Ibdi{h ieg Nibjmbo-Hpcie !;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    3%; Gjwj{moeiews hd DGO

    Waj{j i{j wvh sw{iegs hd bowj{iwz{j he waj gjwj{moeiews hd DGO% Waj do{sw ogjewodojs waj do{mcai{icwj{oswocs waiw iddjcw oetjswmjew gjcosohe-minoef oe mzbwoeiwoheib jewj{|{osjs%Vobboimshes w{iesicwohe chsw wajh{ ieg waj szksjyzjew oewj{eibopiwohe wajh{ ![zfmie

    9?1 Gzeeoef ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    9 o ieg w i{j waj |{htoecj- h{ cow-s|jcodoc

    jddjcw ieg waj womj-s|jcodoc chm|hejew" {js|jcwotjb>ow

    os waj j{{h{ wj{m> 9" woy os waj sjbd-

    {joedh{coef jddjcw hd DGO> ieg9" wo

    q os i tjcwh{ hd biffjg ti{oikbjs" vaoca chewioes jchehmoc

    gjtjbh|mjew |{hqojs" oecbzgoef FG\ ieg |j{ ci|owi FG\ h{ f{hvwa ieg waj hwaj{ chew{hbti{oikbjs%

    Wh jswomiwj waos geimoc |iejb giwi mhgjb !9/" vj gjib vowa waj womj-s|jcodoc jddjcws"w

    " k

    oecbzgoef womj gzmmojs oe waj {jf{jssohe% Waj |{htoecj- h{ cow-s|jcodoc jddjcws cizsj wajsj{oib ch{{jbiwohe |{hkbjm hd goswz{kiecjs oe waj mhgjb% Doqjg-jddjcw ieg {ieghm-jddjcw|{hcjgz{js i{j |hssokbj shbzwohes" kzw iehwaj{ om|h{wiew |hssokbj {jtj{sj-cizsibow |{hkbjm

    {jmioes% Is DGO mi ibsh aitj i djjgkicn jddjcw he jchehmoc gjtjbh|mjew !Sze 9??1"9???> Caje" Caief" ieg Paief 9??:> Vjo 9??:i> Saie" Woie" ieg Sze 9???/" vj aitj whgjib vowa waj |hwjewoib {jtj{sj-cizsibow osszj hd waj mic{hjchehmoc ti{oikbjs% Fotje wajsjjchehmjw{oc checj{es" vj cahhsj waj FMM d{imjvh{n wh jswomiwj waj geimoc mhgjb oe waj|iejb giwi" mioeb dhbbhvoef I{jbbieh ieg Kheg !9??9/> I{jbbieh ieg Khtj{ !9??:/> iegKbzegjbb ieg Kheg !9??1/%

    Od vj oecbzgj waj womj gzmmojs oe waj {jf{jssohe is jq|bieiwh{ ti{oikbjs jmkjggjg oe 9" woq "

    vj hkwioe waj goddj{jecj tj{sohe hd waj geimoc |iejb mhgjb !9/ !I{jbbieh ieg Kheg" 9??9/0

    owwowoow qyy ..= 9"&

    9" % !;/

    Waj |{htoecj h{ cow jddjcws i{j waje jbomoeiwjg k waj goddj{jecj% Isszmoef waiw waj j{{h{wj{m"

    owt " os ehw sj{oibb ch{{jbiwjg ieg waj jq|bieiwh{ ti{oikbjs" 9" woq " i{j vjinb

    jqhfjehzs" o%j%" waj i{j isszmjg wh kj zech{{jbiwjg vowa dzwz{j {jibopiwohes hd waj j{{h{wj{m" I{jbbieh ieg Kheg !9??9/ szffjswjg waj dhbbhvoef wvh mhmjew chegowohes%

    %""3>;;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    9;

    Vowa wajsj dhz{ mhmjew chegowohes" !3/!4/" waj sswjm FMM jswomiwh{ d{hm waj geimoc|iejb giwi {jf{jssohe kjchmjs mh{j jddocojew waie waj goddj{jecj wvh-swj| FMM jswomiwh{"vaoca zsjs heb i szksjw hd waj chegowohes" o%j%" !3/!7/%

    Waj chesoswjec hd waj FMM jswomiwh{ gj|jegs he waj tibogow hd waj mhmjew chegowohes iegwaj tibogow hd waj isszm|wohe waiw waj j{{h{ wj{ms gh ehw szddj{ d{hm sj{oib ch{{jbiwohe% Waj

    do{sw tibogow cajcn os ci{{ojg hzw zsoef waj Si{fie wjsw%6

    Od waj ezbb a|hwajsos hd eh htj{-ogjewodociwohe os {j`jcwjg k ieibpoef waj sim|bj ieibhf hd waj mhmjew chegowohes" wajhtj{ibb tibogow hd waj oesw{zmjews cahsje oe waj jswomiwohe vobb kj h|je wh yzjswohe% Dh{ isjcheg tibogow cajcn wh jesz{j waiw waj j{{h{ wj{ms i{j sj{oibb zech{{jbiwjg" vj cajcn wajsj{oib ch{{jbiwohe |{h|j{w hd waj bjtjb {jsogzibs zsoef waj I{jbbieh-Kheg m9 ieg m;swiwoswocs%

    1Od waj bjtjb {jsogzibs i{j oegjjg sj{oibb zech{{jbiwjg" waje" dh{ waj do{sw-goddj{jecj

    jyziwohe oe !;/" waj {jsogzibs vobb dhbbhv ie MI!9/ |{hcjss" vaoca om|bojs waiw waj do{sw-h{gj{izwhch{{jbiwohes i{j ehe-pj{h kzw waiw waj sjcheg- h{ aofaj{-h{gj{ izwhch{{jbiwohes i{j pj{h%K wjswoef waj ezbb a|hwajsjs hd pj{h do{sw- ieg sjcheg-h{gj{ izwhch{{jbiwohes" {js|jcwotjb"vj jq|jcw waj sofeodociew m9 swiwoswocs ieg oesofeodociew m;

    Ejowaj{ waj goddj{jecj eh{ waj sswjm jswomiwh{ os |j{djcw% Is I{jbbieh ieg Khef !9??9/ iegKbzegjbb ieg Kheg !9??1/ |hoewjg hzw" waj hej-swj| jswomiwh{ os ism|whwocibb oejddocojew{jbiwotj wh waj wvh-swj| jswomiwh{" vaj{jis waj ism|whwoc swiegi{g j{{h{s dh{ waj wvh-swj|jswomiwh{s i{j koisjg ghvevi{gs% Waj{j os wazs i w{igj-hdd kjwvjje jddocojec ieg oedj{jecj{jboikobow% Oe iggowohe" vaje waj ezmkj{ hd oesw{zmjews os jyzib wh h{ bi{fj{ waie waj ezmkj{hd c{hss-sjcwoheib zeows" khwa waj swiegi{g j{{h{s ieg waj Si{fie wjsw i{j sj{ohzsb koisjgghvevi{gs" vaoca oegzcjs waj koisjg ism|whwoc oedj{jecj% Is waos |i|j{ os oewjegjg whghczmjew vajwaj{ waj{j os ie {jbiwohesao| kjwvjje DGO oedbhvs ieg jchehmoc chegowohes h{f{hvwa" vj dhczs mh{j he waj zekoisjg ieg {jboikbj oedj{jecj d{hm waj sim|bj% Wazs" oe wajdhbbhvoef jm|o{ocib ieibsos" vj |{omi{ob chesogj{ waj do{sw-swj| jswomiwh{%

    swiwoswocs wh sz||h{w hz{ jm|o{ocibs|jcodociwohe%

    Hz{ jq|bieiwh{ ti{oikbjs i{j mhswb mic{hjchehmoc mjisz{jmjews% Kisjg he |{jtohzs

    {jsji{ca" waj i{j ehw sw{ocwb jqhfjehzs" ieg wazs vj gh ehw ejjg wh fh wa{hzfa wajs|jcodociwohe sjbjcwohe |{hcjgz{j zsjg oe Cajef ieg Nvie !;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    93

    Hz{ cow-bjtjb giwi i{j chbbjcwjg d{hm waj Caoei Cow Swiwoswocib _ji{khhn !CCS_/99

    dh{ waj9??

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    hksj{tiwohes% Hz{ hve chesw{zcwjg |j{ ci|owi FG\" vaoca os gjehwjg k F\C ;" oec{jisjswaj ezmkj{ hd hksj{tiwohes wh 7";:

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    9:

    Wikbj 90 Gjsc{o|wotj Swiwoswocs

    Waj sim|bj |j{ohg dh{ waj |{htoecoib-bjtjb giwi os d{hm 9??: wh ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    Wikbj ;0 Ch{{jbiwohe Miw{oq

    Waos wikbj |{jsjews waj ch{{jbiwohe chjddocojews kjwvjje |io{s hd ti{oikbjs iw waj |{htoecoib ieg cow bjtjbs"{js|jcwotjb%

    \iejb I0 \{htoecoib Bjtjb

    DGO FG\ F\C F{hvwa Wiq OeW{i GhmOet Vifj [iob

    DGO 9%

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

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    itj{ifj vifj ieg {iobvi bjefwa% Oe chbzmes ^7] ieg ^1]" vj oecbzgj khwa |j{ ci|owi FG\ieg FG\ f{hvwa oe waj simj {jf{jssohe wh wjsw vaoca ti{oikbj os ghmoeiew oe gjwj{moeoefDGO oedbhvs% Vj doeg sofeodociewb |hsowotj ieg swikbj chjddocojews hd biffjg DGO oedbhvs oe ibbhd waj mhgjbs" vaoca gjmhesw{iwjs waj sjbd-{joedh{coef jddjcw hd DGO ieg os chesoswjew vowawaj doegoefs ghczmjewjg k Ajig ieg [ojs !9??4/ ieg Cajef ieg Nvie !9???" ;

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    91

    Wikbj 30 HBS [jf{jssohe [jszbws zsoef \{htoecoib-Bjtjb Giwi

    Waos wikbj |{jsjews waj HBS {jf{jssohe {jszbws zsoef |{htoecoib-bjtjb giwi% Vj chew{hb dh{ khwa {jfoheib ieg womjjddjcws% Oe chbzmes ^9] wh ^3]" vj oecbzgj heb soefbj FG\" |j{ ci|owi FG\ h{ FG\ F{hvwa whfjwaj{ vowa biffjg DGO oewaj {jf{jssohe% Oe chbzmes ^:] wh ^6]" vj igg waj hwaj{ chew{hb ti{oikbjs wh waj {jf{jssohe s|jcodociwohes% Oe mhgjbs ^7]ieg ^1]" vj oecbzgj khwa |j{ ci|owi FG\ ieg FG\ F{hvwa iw waj simj womj" vowa ieg vowahzw waj hwaj{ chew{hbti{oikbjs" {js|jcwotjb% Chbzme ?] {j|bicjs Icwzib DGO zsjg vowa Chew{icwjg DGO is waj gj|jegjew ti{oikbj% w-swiwoswocs i{j oe k{icnjws%

    Gj|jegjew Ti{oikbj0 DGO

    ^9] ^;] ^3] ^7] ^:] ^4] ^6] ^1] ^?]

    Biffjg DGO

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    9?

    FG\ giwi winje go{jcwb d{hm waj CCS_ i{j zsjg% Ahvjtj{" vaje vj svowca wh hz{cibczbiwjg |j{ ci|owi FG\ giwi" vj doeg sofeodociewb |hsowotj chjddocojews% Waj{jdh{j" wajBzcis |i{ighq os ghczmjewjg iw waj cow bjtjb% Oe mhgjbs ^7] ieg ^?]" vj doeg i cowsjchehmoc f{hvwa wh aitj eh jddjcw he DGO oedbhvs" vaoca szffjsws waiw FG\ f{hvwa oszeikbj wh ibwj{ waj dicw waiw cowojs vowa aofaj{ |j{ ci|owi FG\ aitj f{jiwj{ DGO oedbhvs" issahve oe chbzmes ^:] ieg ^9

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    IGKO Vh{noef \i|j{ 3;7 Aj" [zo" ieg Pai

    ;94

    dh{ waj {jfohes vowa kjbhv-mjgoie whwib DGO oedbhvs oewaiw ji{" vj gh ehwaoef% Waje" kisjg he waos ig`zswjg DGO giwi" vj {jgh ibb hd waj jm|o{ocibieibsos% Waj {jszbws caiefj bowwbj vaje chm|i{jg vowa Wikbjs 3 wh 4" vowa shmj hd wajmkjchmoef jtje mh{j sofeodociew wh i cj{wioe jqwjew%

    96

    6% \HSSOKBJ [JSHBZWOHES

    Waj{jdh{j" vj checbzgj waiw {hzeg-w{o||oef |hsjs eh sj{ohzs wa{jiw wh hz{ mioe doegoefs%

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