Agglomeration and Selection Effects in Privatized-SOEs: The Role of SOE Reforms

Yikai Zhao and Jun Nagayasu

No 137, DSSR Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: While privatizing state-owned enterprises (SOE) has been a global trend, its success as an economic policy remains controversial. Focusing on agglomeration and selection effects in firms with different types of ownership, we examine the impact of SOE privatization on firm productivity and how these effects alter during the SOE privatization process. We first show that both Always-private-owned enterprises, or Always-POEs, and Always-SOEs benefit from marked agglomeration effects, highlighting the extensive influence of urban concentration. However, the positive selection effects are present only among Always-POEs; privatized firms only marginally benefited from selection effects after SOE privatization. Moreover, while proximity to the government may be advantageous for improving productivity during their state-owned tenure, it can become an inhibitor after privatization.

Pages: 48 pages
Date: 2023-10
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:toh:dssraa:137

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