China As a 'Developmental State' Miracle: Industrial Policy, Technological Change, and Productivity Growth

86 Pages Posted: 23 Mar 2017

See all articles by Jie Mao

Jie Mao

University of International Business and Economics (UIBE) - Department of Public Economics and Taxation

Shiping Tang

Fudan University - School of International Relations and Public Affairs (SIRPA)

Qiang Zhi

Central University of Finance and Economics (CUFE)

Date Written: March 22, 2017

Abstract

Existing explanations of China’s dramatic economic growth since 1978 have neglected a key piece of the China Puzzle, that is, China since 1978 has been a typical “East Asian Developmental State (EADS)” with a long socialist legacy that regularly deploys industrial and science & technology (S&T) policies to “create winners” in key industries. Combining an original dataset on China’s industrial policy and S&T policy with an original dataset on performance of Chinese firms, we demonstrate that China’s industrial and S&T policies indeed succeeded in “creating winners” in certain industries with. Moreover, whether the state can succeed in “creating winners” critically depends on the nature of an industry. When an industry is an emerging one with rapid pace of technological change, China’s industrial and S&T policies have indeed led to rapid productivity growth and by implication, significant technological catch-up in the industry. In contrast, when an industry is a fairly mature one with only slow pace of technological change, China’s industrial and S&T policies have had little effect on productivity growth. By providing the EADS model with positive econometric evidence for the first time, our study also yields critical policy implications for medium to large developing countries to craft their industrial and S&T policies.

Keywords: industrial policy; creating winners; China; East Asia; developmental state

JEL Classification: L16; L25; L52; O14; O25; O38

Suggested Citation

Mao, Jie and Tang, Shiping and Zhi, Qiang, China As a 'Developmental State' Miracle: Industrial Policy, Technological Change, and Productivity Growth (March 22, 2017). Available at SSRN: https://ssrn.com/abstract=2938908 or http://dx.doi.org/10.2139/ssrn.2938908

Jie Mao

University of International Business and Economics (UIBE) - Department of Public Economics and Taxation ( email )

No.10 Huixin East Street
Chaoyang District, Beijing 100029
China

Shiping Tang (Contact Author)

Fudan University - School of International Relations and Public Affairs (SIRPA) ( email )

220 Handan Road
Shanghai, 200433
China

Qiang Zhi

Central University of Finance and Economics (CUFE)

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
332
Abstract Views
1,329
rank
109,652
PlumX Metrics