Global Competition and the Rise of China

33 Pages Posted: 8 Feb 2017

See all articles by Caroline Freund

Caroline Freund

Peter G. Peterson Institute for International Economics

Dario Sidhu

Peterson Institute for International Economics

Date Written: February 7, 2017

Abstract

Using firm level data, the authors examine how global industrial concentration has changed over the last decade in relation to the rise of China. Between 2006 and 2014, global concentration has declined in most industries and is falling on average across all industries, while firms at the top of the distribution are experiencing significant churning. The resulting enhanced industrial competition is partly attributable to the rising market shares of firms from China and other emerging markets at the expense of incumbent industry leaders. The authors further show evidence of global allocative efficiency — highly productive firms tend to be larger and grow faster. Global concentration has, however, risen significantly in several industries where Chinese state-owned enterprises (SOEs) dominate, and China’s SOEs are on average too large and expanding too fast given their low levels of productivity.

Keywords: big business, multinational enterprise, state-owned enterprise, concentration

JEL Classification: D22, F23

Suggested Citation

Freund, Caroline and Sidhu, Dario, Global Competition and the Rise of China (February 7, 2017). Peterson Institute for International Economics Working Paper No. 17-3. Available at SSRN: https://ssrn.com/abstract=2912922 or http://dx.doi.org/10.2139/ssrn.2912922

Caroline Freund (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Dario Sidhu

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

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