Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China

Song Gao

MPRA Paper from University Library of Munich, Germany

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.

Keywords: privatization; soft budget constraint; transition economies; Chinese economy (search for similar items in EconPapers)
JEL-codes: C33 L25 P31 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-eff and nep-tra
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