Government Assistance and Total Factor Productivity: Firm-level Evidence from China, 1998-2007

Li, S.; Harris, R.

Abstract

The provision of large-scale assistance to industry is very important in China. The major contribution of this paper is to use Chinese firm-level panel data for 1998-2007 to introduce measures of assistance received by each firm directly into industry-level production functions determining firm output. Our results indicate inverted U-shaped gains from assistance: across the 26 industries considered, firms receiving assistance rates of 1-10%, 10-19%, 20-49% and 50+% experienced on average 4.5%, 9.4%, 9.2% and -3% gains in TFP, respectively. We also provide a simple agency model that justifies such a result.

Citation

Li, S., & Harris, R. Government Assistance and Total Factor Productivity: Firm-level Evidence from China, 1998-2007

• Working Paper Type: Working Paper
• Publication Date: Sep 1, 2016
• Deposit Date: Sep 12, 2016
• Publicly Available Date: Sep 21, 2016
• Series Title: CEGAP working papers
• Public URL: https://durham-repository.worktribe.com/output/1169463
• Publisher URL: http://EconPapers.repec.org/RePEc:dur:cegapw:2016_04