Privatization's Influence on Agglomeration and Selection Effects: Evidence from China's Manufacturing Industry

Yikai Zhao and Jun Nagayasu

No 126, DSSR Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: We study the impact of state-owned enterprises'(SOE) privatization on how firm productivity responds to agglomeration and selection effects, and investigate whether and how policymakers can utilize agglomeration and selection to benefit from privatization. As SOEs enjoy privileged treatment because of their government ties, we argue that the agglomeration advantages of SOEs are rooted in their connection with local governments who regulate them, who share local information with surrounding SOEs, such as labor markets, resources, and tacit knowledge. Overall, we attempt to answer the following questions: 1) Will the SOEs' reform negatively (positively) influence enterprises' agglomeration (selection) effects? 2) To what extent is this influence affected by the local government? 3) Is this adverse or favorable impact heterogeneous?

Pages: 38 pages
Date: 2022-07
New Economics Papers: this item is included in nep-cna, nep-eff, nep-geo, nep-reg and nep-ure
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http://hdl.handle.net/10097/00135323

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Persistent link: https://EconPapers.repec.org/RePEc:toh:dssraa:126

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