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The Effects of Federalism and Privatization on Productivity in Chinese Firms

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  • Sean M. Dougherty

    (The Conference Board)

  • Robert H. McGuckin

    (The Conference Board)

Abstract

This study offers empirical evidence about how the structure of government and private ownership affects productivity in Chinese firms. It uses the microdata of China's most recent decennial industrial census, covering all of the 23,000 large and medium industrial firms operating in China during 1995. The results show that government decentralization – 'federalism' – plays an important role in improving the performance of not just collective firms, but also state-owned and mixed public/private ownership firms. This result is strongly confirmatory of much of the recent theoretical work on transition economies that posits a key role for government in the efficient operation of markets. Privatization makes a big difference in performance for firms administered at the federal level, especially state-owned enterprises. Private ownership also makes a large difference for wholly foreign-owned firms, nearly all located in special districts. In local jurisdictions, however, there is little difference in productivity across the various nonstate ownership types, supporting the argument that the regulatory environment played a critical role in successful business performance.

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File URL: http://128.118.178.162/eps/dev/papers/0411/0411016.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0411016.

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Length: 31 pages
Date of creation: 15 Nov 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0411016

Note: Type of Document - pdf; pages: 31
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Web page: http://128.118.178.162

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Keywords: china productivity microdata ownership decentralization;

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  1. Jeffrey D. Sachs & Wing Thye Woo, . "Understanding China'S Economic Performance," Department of Economics 97-04, California Davis - Department of Economics.
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Citations

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Cited by:
  1. Peter Li, 2009. "The Duality of Crony Corruption in Economic Transition: Toward an Integrated Framework," Journal of Business Ethics, Springer, vol. 85(1), pages 41-55, March.
  2. Yanrui Wu, 2002. "Technical Efficiency and Its Determinants in Chinese Manufacturing Sector," Economics Discussion / Working Papers 02-15, The University of Western Australia, Department of Economics.
  3. Wenjing Li & Ran Zhang, 2010. "Corporate Social Responsibility, Ownership Structure, and Political Interference: Evidence from China," Journal of Business Ethics, Springer, vol. 96(4), pages 631-645, November.
  4. David Greenaway & Alessandra Guariglia & Zhihong Yu, . "The More the Better? Foreign Ownership and Corporate Performance in China," Discussion Papers 09/05, University of Nottingham, GEP.

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