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Industry regulation, competition, and the dynamics of productivity growth: evidence from China’s iron and steel industry

Author

Listed:
  • Jianbai Huang

    (Business School, Central South University, Changsha,China)

  • Chuan Liu

    (Business School, Central South University, Changsha,China)

  • Daguo Lü

    (Institute of Industrial Economics, Jiangxi University of Finance Economics,Nanchang,China)

  • Xiaoping Li

    (Business School, Central South University, Changsha,China)

Abstract

This study aims to investigate the characteristics of the efficient evolution of China’s iron and steel industry against the backdrop of limited openness and regulation and to discuss the important effects of regulatory policy and total factor productivity (TFP) of China’s iron and steel industry. The method adopted the Cobb–Douglas production function combined with a semi-parametric method to decompose productivity. This study based on the micro-level dataset of iron and steel enterprises in the database of China’s industrial enterprises between 1998 and 2007 that investigated the intrinsic correlation among corporate entry and exit, market competition of existing enterprises, and TFP growth in the iron and steel industry. The results of the research show that the entry-exit would promote the growth of the aggregate productivity, while the low efficiency of resource allocation would significantly inhibit the TFP growth. The basic conclusion is that, with substantial government intervention in enterprise investments, marketcompetition may not promote optimal resource allocation efficiency in China’s iron and steel industry, but make the allocation less efficient.

Suggested Citation

  • Jianbai Huang & Chuan Liu & Daguo Lü & Xiaoping Li, 2015. "Industry regulation, competition, and the dynamics of productivity growth: evidence from China’s iron and steel industry," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 33(2), pages 299-324.
    • Handle: RePEc:rfe:zbefri:v:33:y:2015:i:2:p:299-324
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    References listed on IDEAS

    as
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    2. Perkins, Dwight H., 2002. "The challenge China's economy poses for Chinese economists," China Economic Review, Elsevier, vol. 13(4), pages 412-418, December.
    3. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    4. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2009. "Measuring and Analyzing Cross-country Differences in Firm Dynamics," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 15-76, National Bureau of Economic Research, Inc.
    5. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    6. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
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    Cited by:

    1. Yanan Ren & Xiaojie Liu & Litao Liu & Lei Shi, 2018. "Measuring the Resource Productivity of Crude Oil: A Chemical Network and its Application," Journal of Industrial Ecology, Yale University, vol. 22(6), pages 1331-1338, December.

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    Keywords

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    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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