43 Pages Posted: 29 Nov 2015 Last revised: 10 Mar 2017
Date Written: March 8, 2017
Privatization of state-owned enterprises (SOEs) since the late 1990s has been credited for China's productivity growth, but the literature has not formally incorporated privatization and it productivity dynamics. We augment Ackerberg, Caves, and Frazer's (2015) model to estimate the TFP impacts of ownership types while allowing for flexible transition dynamics. Results suggest private firms are 192% more efficient than SOEs in the long run. Privatized SOEs do not achieve this gain overnight but close most of the gap within six years on average. We also find the private TFP premium is larger in the final-good sector than in "strategic" (i.e., heavily regulated) industries including petroleum, metals, and car manufacturing.
Keywords: Privatization, Productivity, Transition Economy
JEL Classification: D24, L11, L33, O31, O47
Suggested Citation: Suggested Citation
Chen, Yuyu and Igami, Mitsuru and Sawada, Masayuki and Xiao, Mo, Privatization and Productivity in China (March 8, 2017). Available at SSRN: https://ssrn.com/abstract=2695933 or http://dx.doi.org/10.2139/ssrn.2695933