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Privatization and productivity in China

Author

Listed:
  • Yuyu Chen
  • Mitsuru Igami
  • Masayuki Sawada
  • Mo Xiao
Abstract
We study how ownership affects productivity in the context of China's privatization of state‐owned enterprises (SOEs). Its true impact remains unclear and controversial, partly because the government selectively privatized or liquidated nonperforming SOEs. To address this selection problem, we augment the Gandhi–Navarro–Rivers nonparametric production function to incorporate endogenous ownership changes. Results suggest private firms are 53% more productive than SOEs on average, but the benefits of privatization take several years to fully materialize. This productivity gap is smaller among larger firms and in economically more liberal times and places; it is larger in consumer‐facing and high‐tech industries.

Suggested Citation

  • Yuyu Chen & Mitsuru Igami & Masayuki Sawada & Mo Xiao, 2021. "Privatization and productivity in China," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 884-916, December.
  • Handle: RePEc:bla:randje:v:52:y:2021:i:4:p:884-916
    DOI: 10.1111/1756-2171.12395
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    References listed on IDEAS

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    7. Wang, Chang & Guo, Yue & Yang, Yu & Chen, Shiyi, 2022. "The environmental benefits of electricity industry restructuring in China: Ownership mixing vs. vertical unbundling," Energy Economics, Elsevier, vol. 115(C).
    8. Huobao Xie & Weiwei Yang & Qingyuan Li, 2022. "Can New Private Shareholders Help Improve SOEs' Total Factor Productivity? Evidence from the Chinese Listed SOEs," Annals of Economics and Finance, Society for AEF, vol. 23(1), pages 23-62, May.
    9. Liu, Rui & Zheng, Linhao & Chen, Zheang & Cheng, Mengyao & Ren, Yuzhuo, 2024. "Digitalization through supply chains: Evidence from the customer concentration of Chinese listed companies," Economic Modelling, Elsevier, vol. 134(C).

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