The Unbalanced Growth Hypothesis and the Role of the State: The Case of China’s State-Owned Enterprises

57 Pages Posted: 20 Nov 2010  

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST) - Division of Social Science

Date Written: November 19, 2010

Abstract

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.

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

Suggested Citation

Holz, Carsten A., The Unbalanced Growth Hypothesis and the Role of the State: The Case of China’s State-Owned Enterprises (November 19, 2010). Available at SSRN: https://ssrn.com/abstract=1712017 or http://dx.doi.org/10.2139/ssrn.1712017

Carsten A. Holz (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Division of Social Science ( email )

Division of Social Science
Clear Water Bay
Clear Water Bay, Kowloon
Hong Kong

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