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How does privatization work in China?

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  • Bai, Chong-En
  • Lu, Jiangyong
  • Tao, Zhigang

Abstract

Bai, Chong-En, Lu, Jiangyong, and Tao, Zhigang--How does privatization work in China? Using a comprehensive panel data set of China's state-owned enterprises, we investigate the impacts of privatization on social welfare and firm performance indicators. The privatization of China's state-owned enterprises was found to have little impact on the change of firm employment, but it did lead to increasing sales and hence higher labor productivity. Meanwhile, there was a gain in firm profitability contributed to mostly by the reduction of managerial expenses to sales. The impact of privatization was sustainable in the long run, and was more pronounced when state ownership was reduced to minority position as opposed to majority position.

Suggested Citation

  • Bai, Chong-En & Lu, Jiangyong & Tao, Zhigang, 2009. "How does privatization work in China?," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 453-470, September.
  • Handle: RePEc:eee:jcecon:v:37:y:2009:i:3:p:453-470
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    Keywords

    Privatization Social welfare responsibility Firm performance Firm employment Managerial expenses;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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