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Barriers to Entry and Regional Economic Growth in China

Loren Brandt (), Gueorgui Kambourov and Kjetil Storesletten ()

No 14965, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Labor productivity in manufacturing differs starkly across regions in China. We document that productivity, wages, and start-up rates of non-state firms have nevertheless experienced rapid regional convergence after 1995. To analyze these patterns, we construct a Hopenhayn (1992) model that incorporates location-specific capital wedges, output wedges, and entry barriers. Using Chinese Industry Census data we estimate these wedges and examine their role in explaining differences in performance and growth across prefectures. Entry barriers explain most of the differences. We investigate the empirical covariates of these entry barriers and find that barriers are causally related to the size of the state sector.

Keywords: capital distortions; China; convergence; Entry Barriers; Firm entry; growth; output distortions; SOE reform; transition (search for similar items in EconPapers)
JEL-codes: D22 D24 E24 O11 O14 O16 O40 O53 P25 R13 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-bec, nep-ent, nep-mac, nep-sbm and nep-ure
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Working Paper: Barriers to Entry and Regional Economic Growth in China (2020) Downloads
Working Paper: Barriers to Entry and Regional Economic Growth in China (2018) Downloads
Working Paper: Barriers to Entry and Regional Economic Growth in China (2018) Downloads
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