Firm Quasi-Dynamics in the Chinese Manufacturing Industries

29 Pages Posted: 31 Jan 2020

See all articles by Lixing Li

Lixing Li

Peking University

Qihong Liu

University of Oklahoma - Department of Economics

Changyu Ren

Peking University

Date Written: December 31, 2019

Abstract

We explore the firm quasi-dynamics (entry/exit and growth) in the Chinese manufacturing industries and investigate how these dynamics vary across regions. Our results show that relative to provinces with less developed economies, in provinces with more developed economies:

(1) There are higher shares of new firms;

(2) New firms are smaller and more labor-intensive;

(3) Firms exit at a quicker rate and surviving firms grow faster.

These results point toward cross-region differences in market efficiency in terms of how much it costs a firm to enter or exit the market. Our findings shed light on how firms should adapt their strategies across regions and how the government should create sound policies on industrial upgrading and relocation.

Keywords: firm dynamics, entry and exit, industrial shift, market thickness, labor cost

JEL Classification: D24, L25, O14

Suggested Citation

Li, Lixing and Liu, Qihong and Ren, Changyu, Firm Quasi-Dynamics in the Chinese Manufacturing Industries (December 31, 2019). Available at SSRN: https://ssrn.com/abstract=3515640 or http://dx.doi.org/10.2139/ssrn.3515640

Lixing Li

Peking University ( email )

National School of Development
Peking University
Beijing, Beijing 100871
China

Qihong Liu (Contact Author)

University of Oklahoma - Department of Economics ( email )

Norman, OK 73019-2103
United States
405-325-5846 (Phone)

HOME PAGE: http://qliu.oucreate.com

Changyu Ren

Peking University ( email )

National School of Development
Peking University
Beijing, Beijing 100871
China

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