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Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China

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  • Gao, Song

Abstract

This paper studies the effects of privatization and non-ownership-change reforms on firms’ productivity in China. As one of the most prominent empirical challenges in China privatization studies, endogeneity problems are addressed with a first-difference instrumental variable GMM estimation. We find that privatization does not improve firms’ productivity immediately. Instead, its effects become significantly positive in the year after conversion. In addition, partial privatization fails to lead to improved efficiency whereas insider privatization boosts firms’ productivity shortly after the first year of privatization but the effects quickly fade after two years of privatization. Lastly, all non-ownership-change reforms, except leasing, are proved to be ineffective even when issues like social burdens, worker redundancy, management incentives and soft-budget constraint are tackled before the restructuring.

Suggested Citation

  • Gao, Song, 2010. "Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China," MPRA Paper 24766, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24766
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    More about this item

    Keywords

    privatization; soft budget constraint; transition economies; Chinese economy;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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