IDEAS home Printed from https://ideas.repec.org/a/taf/rjapxx/v29y2024i1p206-236.html
   My bibliography  Save this article

Selective industrial policy and capital misallocation: evidence from the ‘Revitalization Plan for Ten Industries’ in China

Author

Listed:
  • Xiulu Huang
  • Pengfei Ge
  • Bole Zhou

Abstract

Capital misallocation is a main obstacle to China’s economic development. This paper deploys a quasi-natural experiment formed by the ‘Revitalization Plan for Ten Industries’ (RPTI) and examines the impacts that selective industrial policies have on capital misallocation. It is found that the RPTI significantly exacerbates capital misallocation and that the effect does not disappear when the RPTI ends. Mechanism analysis indicates that the RPTI significantly increases the capital productivity of firm groups with high capital productivity but significantly reduces the capital productivity of firm groups with low capital productivity. This can be further interpreted by a decrease or an increase of inefficient investment and financial constraints faced by the corresponding firm groups. The documented relationship is stronger in state-owned enterprises and in firms located in areas of high marketization. Our findings advance the understanding of governmental policy intervention in developing countries.

Suggested Citation

  • Xiulu Huang & Pengfei Ge & Bole Zhou, 2024. "Selective industrial policy and capital misallocation: evidence from the ‘Revitalization Plan for Ten Industries’ in China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 29(1), pages 206-236, January.
    • Handle: RePEc:taf:rjapxx:v:29:y:2024:i:1:p:206-236
    DOI: 10.1080/13547860.2021.2010378
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13547860.2021.2010378
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13547860.2021.2010378?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rjapxx:v:29:y:2024:i:1:p:206-236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rjap .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.