Sebastián Claro () (Instituto de Economía. Pontificia Universidad Católica de Chile.)
Abstract
The profitability gap between state-owned enterprises and the non-state industrial sector in China is significant. Using a highly-disaggregated database of China’s industry in 2003, we estimate an average return to capital in state-owned enterprises about 9% that of foreign-invested firms, and about 59% of the return to capital in all non-state-owned industrial enterprises. Capital return differences are mainly driven by productivity differences, but the negative impact on SOEs’ rental rates of a relatively integrated labor market is not negligible. The rental rate gap is much higher in sectors that represent a small share in SOEs’ output and assets, meaning that the capital subsidies granted by the government have not biased SOEs’ production structure toward industries with greatest profitability gap. The inefficiency cost of distortions in relative factor prices is estimated between 5% and 8% of total industrial output.
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Publisher Info
Paper provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number
305.
Find related papers by JEL classification: F15 - International Economics - - Trade - - - Economic Integration O1 - Economic Development, Technological Change, and Growth - - Economic Development P3 - Economic Systems - - Socialist Institutions and Their Transitions P42 - Economic Systems - - Other Economic Systems - - - Productive Enterprises; Factor and Product Markets; Prices
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