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Externality from China’s Non-State Sector’s Growth to its State-Sector’s Growth: An Empirical Assessment

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  • Xiaolu Wang

    (National Economic Research Institute, Beijing, Asia Pacific School of Economics and Government, ANU, Canberra.)

  • Kaliappa Kalirajan

    (Foundation for Advanced Studies on International Development, Tokyo. The Australian National University, Canberra)

Abstract

Applying a modified modelling framework of Feder (1983) and of Ram (1986) to macroeconomic data from China, this paper assesses the direct and indirect (externality) contributions of the non-state sector growth to China’s economic growth, particularly to state-sector growth during the initial period of economic reform. The results from the empirical analysis show that the growth of the non-state sector has induced pressure on the state enterprises through intensified market competition to improve their efficiency, and has thus contributed to economic growth as an externality.

Suggested Citation

  • Xiaolu Wang & Kaliappa Kalirajan, 2003. "Externality from China’s Non-State Sector’s Growth to its State-Sector’s Growth: An Empirical Assessment," Journal of Social and Economic Development, Institute for Social and Economic Change, Bangalore, vol. 5(2), pages 163-181, July-Dece.
    • Handle: RePEc:sch:journl:v:5:y:2003:i:2:p:163-181
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