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Total factor productivity and state ownership: Evidence from China's 2008 stimulus package

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  • Shi‐zhuan Han
  • Taotao Duan
  • Han Gao
  • Tianhang Zhou
  • Jie Li

Abstract

We examine the impact of China's economic stimulus plan in 2008 on the total factor productivity (TFP) of China's listed firms. We hypothesize that firms operating in regions characterized by greater resource misallocation would experience a more pronounced decline in TFP following the implementation of the stimulus plan. To gauge the extent of resource misallocation, we employ the proportion of state‐owned enterprises (SOEs) as a measure. Our findings reveal a substantial decrease in TFP for firms located in provinces with higher SOE shares compared to those in provinces with lower SOE shares, amounting to approximately 9.2%. These results highlight the unintended policy consequence of the stimulus plan for firm‐level productivity in China.

Suggested Citation

  • Shi‐zhuan Han & Taotao Duan & Han Gao & Tianhang Zhou & Jie Li, 2024. "Total factor productivity and state ownership: Evidence from China's 2008 stimulus package," Manchester School, University of Manchester, vol. 92(3), pages 246-280, June.
    • Handle: RePEc:bla:manchs:v:92:y:2024:i:3:p:246-280
    DOI: 10.1111/manc.12466
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