THE DETERMINANTS AND EFFECTIVENESS OF INDUSTRIAL POLICY IN CHINA: A STUDY BASED ON FIVE-YEAR PLANS

Yiyun Wu, Xiwei Zhu and Nicolaas Groenewold
Additional contact information
Yiyun Wu: Zhejiang University, China
Xiwei Zhu: Zhejiang University, China
Nicolaas Groenewold: Economics Programme, University of Western Australia, https://www.web.uwa.edu.au/person/nicolaas.groenewold

No 16-21, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Industrial policy is ubiquitous in both developing and developed countries. In China, government intervention in favor of specific industries is believed to play an important role in economic development. The targeting of strategic industries for preferential treatment has been a central part of both national and provincial Five-Year Plans (FYPs). While arguments for and against industrial policy are well-known, empirical evidence regarding both the formulation and effects of such policy are scant. Our paper contributes to the literature by examining industrial policy in China over the period of four FYPs (the 9th to the 12th, running over the period 1996 to 2015). In particular, based on China’s national and provincial FYPs, this paper investigates the determinants and effectiveness of industrial policy at the four-digit manufacturing sector level. This paper finds that the central government’s preferences act as a key determinant of the provincial governments’ FYPs. High productivity does not improve an industry’s chance of selection by the provincial governments. We also show that preferential policy has a significant positive effect on industry output growth while the FYP is in effect but that there is no evidence of a beneficial effect beyond the end of the particular FYP.

Keywords: Industrial Policy; Five-Year Plan; Industrial Development; Productivity (search for similar items in EconPapers)
JEL-codes: E61 E65 H77 (search for similar items in EconPapers)
Pages: 51
Date: 2016
Note: MD5 = dd0026945b702e21c0e58c14464cb473
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%2 ... 21_Wu%20et%20al..pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:16-21

Access Statistics for this paper

More papers in Economics Discussion / Working Papers from The University of Western Australia, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sam Tang ().