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Reform and competitive selection in China: An analysis of firm exits

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  • Yang, Qing Gong
  • Temple, Paul

Abstract

This paper considers aspects of the competitive selection process in China – firm entry, survival, and exit – in an important sector of manufacturing, looking in particular for changes resulting from the process of reform. Using industry census data from a province in North-East China, we find substantial differences in the process between ownership types. By conducting decompositions of aggregate growth and exploring the determinants of firm's exit using a hazard rate model, we observe a substantial rate of churning of enterprises in the sector, finding that the competitive selection processes operate, for small and collectively owned enterprises (COEs), in a manner consistent with what is known about a private market economy. While the hazard for state owned enterprises (SOEs) is lower than for COEs, we find that the reforms introduced in 1992 were important in closing the gap for similarly situated firms.

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  • Yang, Qing Gong & Temple, Paul, 2012. "Reform and competitive selection in China: An analysis of firm exits," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 286-299.
    • Handle: RePEc:eee:streco:v:23:y:2012:i:3:p:286-299
    DOI: 10.1016/j.strueco.2012.04.004
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    3. Calá, Carla Daniela & Arauzo-Carod, Josep-Maria & Manjón-Antolín, Miguel, 2015. "The determinants of entrepreneurship in developing countries," Nülan. Deposited Documents 2125, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
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    5. Carla Daniela Calá & Miguel Manjón-Antolín & Josep-Maria Arauzo-Carod, 2017. "Regional Determinants of Exit Across Firms’ Size: Evidence from Argentina," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 108(6), pages 768-785, December.
    6. Spaliara, Marina-Eliza & Tsoukas, Serafeim, 2013. "What matters for corporate failures in Asia? Exploring the role of firm-specific characteristics during the Asian crisis," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 83-96.
    7. Calá, Carla Daniela, 2014. "Regional issues on firm entry and exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 2023, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    8. Calá, Carla Daniela & Manjón-Antolín, Miguel & Arauzo-Carod, Josep-Maria, 2017. "Regional determinants of exit across firms' size: evidence from a developing country," Nülan. Deposited Documents 2548, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    9. Amankwah-Amoah, Joseph & Zhang, Hongxu, 2015. "Business failure research," MPRA Paper 67848, University Library of Munich, Germany.

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    More about this item

    Keywords

    Competition; Exit; Productivity; Hazard models;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D2 - Microeconomics - - Production and Organizations
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems

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