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Reforms and Productivity Dynamics in Chinese State-Owned Enterprises

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  • Peter McGoldrick
  • Patrick Paul Walsh

Abstract

Institutional change has taken place incrementally since 1978 for State-Owned Enterprises (SOEs) in the Industrial Sector of China. We will provide evidence for the notion that this is largely due to increased domestic competitive pressures and the opportunities arising from the integration of international markets. In this paper we estimate the effect of deep reform (the right to hire and fire labour, buy and sell capital and operate on international markets) on the productivity dynamics of entreprises. Using a unique balanced panel of681 SOEs for the period 1980 to 1994, we find consistent production function estimatesusing an algorithm put forward in Olley and Pakes (1996), which estimates using an simultaneity bias. Futhermore, we allow selection bias by formulating an entry that exposure to deep reform hav lead to higher productivity realisations while remaining under state ownership.

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  • Peter McGoldrick & Patrick Paul Walsh, 2004. "Reforms and Productivity Dynamics in Chinese State-Owned Enterprises," The Institute for International Integration Studies Discussion Paper Series iiisdp021, IIIS.
    • Handle: RePEc:iis:dispap:iiisdp021
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    References listed on IDEAS

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    1. McMillan, John & Naughton, Barry, 1992. "How to Reform a Planned Economy: Lessons from China," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 8(1), pages 130-143, Spring.
    2. Richard Blundell & Stephen Bond & Frank Windmeijer, 2000. "Estimation in dynamic panel data models: improving on the performance of the standard GMM estimator," IFS Working Papers W00/12, Institute for Fiscal Studies.
    3. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    4. Jozef Konings & Patrick Paul Walsh, 1998. "Disorganisation in the Transition Process: Firm Level Evidence from Ukraine," LICOS Discussion Papers 7198, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. Jefferson, Gary H., 1989. "Potential sources of productivity growth within Chinese industry," World Development, Elsevier, vol. 17(1), pages 45-57, January.
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    Cited by:

    1. Marian Rizov & Patrick Paul Walsh, 2005. "Linking Productivity to Trade in the Structural Estimation of Production within UK Manufacturing Industries," The Institute for International Integration Studies Discussion Paper Series iiisdp98, IIIS.

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    More about this item

    JEL classification:

    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • D20 - Microeconomics - - Production and Organizations - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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