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Would behaviors of state-owned enterprises impact the performance of downstream industries in China?

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  • Jia, Zhijie
  • Wen, Shiyan
  • Lin, Boqiang

Abstract

The inefficiency of state-owned enterprises (SOEs) not only affects their own performance but also has implications for downstream enterprises. However, existing literature has not been able to accurately assess the impact of SOEs on the downstream sector. This study presents an innovative approach by combining input-output technologies and econometric models to construct Pair-Weighted Least Square (PWLS) estimations using a dataset of 20,403,924 firm-level pairs. The analysis examines the impact of SOEs on downstream performance and provides evidence of their negative influence as well as the effectiveness of SOEs reform in China. The findings indicate that SOEs have exerted a detrimental effect on downstream performance between 2008 and 2019. Medium-sized SOEs, due to their larger scale and relatively lower regulation, exhibit a particularly negative impact. However, as the reform of SOEs in China has progressed, the negative effect of SOEs on downstream enterprises has gradually diminished. Important factors indicative of SOEs reform, such as efficiency, equity concentration, and scale, play crucial roles in mitigating the harmful effects on the downstream sector. The reform of SOEs in China can offer valuable insights for the reform of state-owned enterprises worldwide.

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  • Jia, Zhijie & Wen, Shiyan & Lin, Boqiang, 2024. "Would behaviors of state-owned enterprises impact the performance of downstream industries in China?," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1007-1035.
    • Handle: RePEc:eee:ecanpo:v:81:y:2024:i:c:p:1007-1035
    DOI: 10.1016/j.eap.2024.01.015
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