State-owned enterprise presence: Local spillovers

Difei Ouyang

China Economic Review, 2024, vol. 84, issue C

Abstract: How can the state sector affect nonstate firms? The state sector can cause factor scarcity by occupying disproportionately abundant resources in a relatively closed economy. Frictional regional factor markets and sizeable geographical variations in the state sector make China ideal for studying this factor supply channel. We find that in cities with a strong presence of state-owned enterprises (SOEs), non-SOEs grow more slowly, especially in capital growth. This is more pronounced among financially constrained firms, inducing capital misallocation. Moreover, relative factor scarcity is compensated by higher productivity growth, especially among low-productivity firms. These results imply broad spillover effects of the state sector.

Keywords: State-owned enterprise; Growth; Productivity (search for similar items in EconPapers)
JEL-codes: D22 O12 O47 R11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:84:y:2024:i:c:s1043951x24000038

DOI: 10.1016/j.chieco.2024.102114

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