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Economic growth and multi-tasking by state-owned enterprises: An analytic framework and empirical study based on Chinese provincial data

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  • Huang, Xianfeng
  • Li, Ping
  • Lotspeich, Richard

Abstract

By preventing large-scale unemployment during China's economic transition, state-owned enterprises (SOEs) helped maintain social stability, which supported the development of non-state sectors through a positive externality. Yet this burden reduced the productive efficiency of SOEs. Using a simple framework with two sectors, our paper decomposes the conflicting contributions of SOEs (lower efficiency but enhanced stability) to regional economic growth during 1992-2007. We find that productive efficiency in the state sector was lower than in other sectors and identify a significant positive externality that supported non-state sectors. Since these two effects offset each other, the contribution of SOEs to economic growth in China during our sample time frame was not significantly different from that of non-state enterprises.

Suggested Citation

  • Huang, Xianfeng & Li, Ping & Lotspeich, Richard, 2010. "Economic growth and multi-tasking by state-owned enterprises: An analytic framework and empirical study based on Chinese provincial data," Economic Systems, Elsevier, vol. 34(2), pages 160-177, June.
    • Handle: RePEc:eee:ecosys:v:34:y:2010:i:2:p:160-177
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    3. Szarzec, Katarzyna & Dombi, Ákos & Matuszak, Piotr, 2021. "State-owned enterprises and economic growth: Evidence from the post-Lehman period," Economic Modelling, Elsevier, vol. 99(C).
    4. Jan Fidrmuc & Shuo Huang, 2013. "Unemployment, Growth and Speed of Transition in China," CESifo Working Paper Series 4410, CESifo.
    5. Hao Qi & David M. Kotz, 2020. "The Impact of State-Owned Enterprises on China’s Economic Growth," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(1), pages 96-114, March.
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    7. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Kim, Chul Ju & Mortha, Aline, 2019. "A Comprehensive Evaluation Framework on the Economic Performance of State-Owned Enterprises," ADBI Working Papers 949, Asian Development Bank Institute.
    8. Piotr Matuszak, 2023. "State-Owned Enterprises and Endogenous Growth," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 15(1), pages 65-89, March.

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