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Policy incentives, ownership effects, and firm productivity—Evidence from China’s Agricultural Leading Firms Program

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  • Lin, Gan
  • Takahashi, Yoshifumi
  • Nomura, Hisako
  • Yabe, Mitsuyasu

Abstract

This study explores the impact of the Agricultural Leading Firms Program (ALFP) on the productivity of China’s agro-processing firms utilizing firm-level data from 1998–2013. The propensity score matching difference-in-differences method is used to control for endogeneity. We find that ALFP’s implementation promotes the productivity of agro-processing firms. However, this productivity enhancement occurs only in non-state-owned enterprises (non-SOEs); the productivity of SOEs is not affected. Regarding the underlying mechanisms, studies indicate that ALFP’s policy incentives for SOEs are mainly in the form of credit support and for non-SOEs as tax incentives and subsidies. Moreover, although policy incentives promote research and development expenditures by both SOEs and non-SOEs, credit support cannot alleviate the overinvestment of SOEs, while tax incentives and subsidies actually improve the investment efficiency of non-SOEs; this may cause the heterogeneous effects by ownership.

Suggested Citation

  • Lin, Gan & Takahashi, Yoshifumi & Nomura, Hisako & Yabe, Mitsuyasu, 2022. "Policy incentives, ownership effects, and firm productivity—Evidence from China’s Agricultural Leading Firms Program," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 845-859.
    • Handle: RePEc:eee:ecanpo:v:73:y:2022:i:c:p:845-859
    DOI: 10.1016/j.eap.2022.01.001
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    Cited by:

    1. Lin Gan & Takahashi Yoshifumi & Nomura Hisako & Yabe Mitsuyasu, 2024. "The short‐ and long‐term impacts of overinvestments on the profitability of agri‐food processing firms in China," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 227-247, January.
    2. Wenyuan Hua & Zhihan Chen & Liangguo Luo, 2022. "The Effect of the Major-Grain-Producing-Areas Oriented Policy on Crop Production: Evidence from China," Land, MDPI, vol. 11(9), pages 1-28, August.

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    More about this item

    Keywords

    Policy incentive; Ownership effect; Productivity; State-owned enterprises;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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