Political Connections, State Ownership and Productivity in China
Richard Harris (),
Nigar Hashimzade and
No 6236, CESifo Working Paper Series from CESifo Group Munich
Subordination of business to political influence has remains pervasive in China. We construct a Schumpeterian-type model of growth with managerial time allocation between productive activities and building up political connections. The model predicts the impact of different patterns of state ownership and/or political connectedness on firm productivity linked to a period of liberalization. We then investigate the relationship between political connections, state ownership, and total factor productivity (TFP) using firm-level data for China between 1998 and 2007. We find, consistent with the model, that the firms with the highest levels of TFP had low levels of political affiliation and/or state ownership.
Keywords: TFP; political connections; state ownership; China (search for similar items in EconPapers)
JEL-codes: D24 O14 O43 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6236
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