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What effect does the size of the state-owned sector have on regional growth in China?

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  • Phillips, Kerk L.
  • Kunrong, Shen

Abstract

This abstract will be reformatted upon submission. You don't need to format for line-breaks here!!!!! This paper tests the contributions of the size of state-owned enterprises as a determinant of China’s economic growth. The methodology is discussed in papers by Levine and Renelt (1992) and Sala-i-Martin (1997). We estimate regressions with growth of output and total factor productivity as the dependent variable and a variety of other factors, including measures of the size of the state-run sector, as regressors. We find that controlling for a variety of other factors, the greater the importance of state owned enterprises, as measured by the proportion of total industrial production they produce, the lower the provincial growth rate. The average estimate is that a decrease in the SOE share of industrial production by ten percentage points increases real GDP growth the following year by 1.14%. The average impacts of a reduction in the SOE share in employment are smaller in absolute magnitude and different for large provinces than they are for small ones. Large provinces actually have higher growth rates if this share rises, while smaller provinces have higher growth rates when it falls.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 15 (2005)
Issue (Month): 6 (January)
Pages: 1079-1102

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Handle: RePEc:eee:asieco:v:15:y:2005:i:6:p:1079-1102

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References

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  1. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-83, May.
  2. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
  3. Malcolm Knight & Norman Loayza & Delano Villanueva, 1993. "Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 512-541, September.
  4. Coulombe, S., 2000. "New Evidence of Convergence Across Canadian Provinces: the Role of Urbanization," Working Papers 0002e, University of Ottawa, Department of Economics.
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  10. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
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  13. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, vol. 7(1), pages 1-21.
  14. Liu, Tung & Li, Kui-Wai, 2001. "Impact of liberalization of financial resources in China's economic growth: evidence from provinces," Journal of Asian Economics, Elsevier, vol. 12(2), pages 245-262.
  15. Chow, Gregory C, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 809-42, August.
  16. Derek C. Jones & Cheng Li & Ann L. Owen*, 2003. "Growth and Regional Inequality in China During the Reform Era," William Davidson Institute Working Papers Series 2003-561, William Davidson Institute at the University of Michigan.
  17. Wei, Shang-Jin & Wang, Tao, 1997. "The siamese twins: Do state-owned banks favor state-owned enterprises in China?," China Economic Review, Elsevier, vol. 8(1), pages 19-29.
  18. Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc.
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Cited by:
  1. Chen, Baizhu & Phillips, Kerk L., 2008. "Regional Growth in China: An Empirical Investigation using Multiple Imputation and Province-level Panel Data," MPRA Paper 23553, University Library of Munich, Germany.
  2. Catin, Maurice & Luo, Xubei & Van Huffel, Christophe, 2005. "Openness, industrialization, and geographic concentration of activities in China," Policy Research Working Paper Series 3706, The World Bank.

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