The Unbalanced Growth Hypothesis and the Role of the State: The Case of China’s State-Owned Enterprises
Carsten A. Holz
Hong Kong University of Science & Technology (HKUST) - Division of Social Science
November 19, 2010
Albert Hirschman’s unbalanced growth hypothesis suggests that a developing economy can promote economic growth by initially investing in industries with high backward and forward linkages. In the case of Chinese economic policy today, one application would be the continued presence of the state in high-linkage sectors and the strategic withdrawal of the state from low-linkage sectors. The evidence shows that while the degree of linkage plays an important role in generating economic growth in China, province-specific withdrawal strategies for the state sector have no effect on economic growth.
Number of Pages in PDF File: 57
Keywords: linkage, state ownership, industrial policy, unbalanced growth hypothesis, input-output model, Albert Hirschman
JEL Classification: R1, R11, R15, R58, O1, O11, O2, O53, P21
Date posted: November 20, 2010
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