Public Versus Private Ownership of Firms: Evidence from Rural China

Hehui Jin and Yingyi Qian

The Quarterly Journal of Economics, 1998, vol. 113, issue 3, 773-808

Abstract: Why are many of China's successful rural enterprises publically owned by local communities? Using a set of provincial data, we find that the share of community public firms (Township-Village Enterprises, or TVEs) relative to private enterprises is higher where the central government's influence is greater, the community government's power is stronger, and the level of market development is lower. We also find that TVEs help achieve the community government's goals of increasing government revenue, rural nonfarm employment, and rural income. However, TVEs do not increase rural income given the levels of nonfarm employment and local public goods provision, indicating possible inefficiency as compared with private enterprises.

Date: 1998
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