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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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  • Phillips, Kerk L. & Kunrong, Shen, 2005. "What effect does the size of the state-owned sector have on regional growth in China?," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1079-1102, January.
  • Handle: RePEc:eee:asieco:v:15:y:2005:i:6:p:1079-1102
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Liu, Yongzheng & Alm, James, 2016. "“Province-Managing-County” fiscal reform, land expansion, and urban growth in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 82-100.
    2. Phillips, Kerk L. & Chen, Baizhu, 2011. "Regional growth in China: An empirical investigation using multiple imputation and province-level panel data," Research in Economics, Elsevier, vol. 65(3), pages 243-253, September.
    3. Chun-Yu Ho & Dan Li, 2010. "Spatial Dependence and Divergence across Chinese Cities," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 386-403, May.
    4. 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.

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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