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Estimating Productivity Dynamics During Institutional Change: An Application To Chinese State Owned Enterprises 1980-1994

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  • Patrick Paul Walsh
  • Peter McGoldrick

    (Department of Economics, Trinity College)

Abstract

We estimate the productivity dynamics of 680 industrial Chinese State-Owned Enterprises (SOEs) between 1980 and 1994. During this time managerial autonomy over factor markets was introduced. The timing of autonomy varied across SOEs and take-up was an endogenous process: high-productivity SOEs where more likely to take managerial control. We allow for this by adapting an algorithm developed in Olley & Pakes (1996) in order to generate estimates of productivity dynamics that deal with both simultaneity and endogenous selection biases. Apart from offering a methodology to estimate productivity dynamics during endogenous institutional change, we demonstrate that SOEs in China obtained productivity gains from managerial autonomy over factor markets in the years before privatisation.

Suggested Citation

  • Patrick Paul Walsh & Peter McGoldrick, 2005. "Estimating Productivity Dynamics During Institutional Change: An Application To Chinese State Owned Enterprises 1980-1994," Trinity Economics Papers tep14, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep14
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    1. Dewatripont, Mathias & Roland, Gerard, 1995. "The Design of Reform Packages under Uncertainty," American Economic Review, American Economic Association, vol. 85(5), pages 1207-1223, December.
    2. Gordon, Roger H & Li, Wei, 1991. "Chinese Enterprise Behavior under the Reforms," American Economic Review, American Economic Association, vol. 81(2), pages 202-206, May.
    3. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    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. Gary H. Jefferson & Thomas G. Rawski, 1994. "Enterprise Reform in Chinese Industry," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 47-70, Spring.
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