Anayses & Alternatives (분석과 대안)

Korea Consensus Institute(KCI) (사단법인 코리아컨센서스연구원)
권호 표지

The Changing Roles of Ownership in the Economic Growth in China

  • Received : 2020.08.08
  • Accepted : 2020.09.06
  • Published : 2020.09.29
Download PDF
⟨ Previous Next ⟩

Abstract

This paper examines the changing roles of ownership in the economic growth by using a panel data set of 30 provinces in China for the period (1999-2010). With the use of absolute and relative presence variables, this study shows that private enterprises have emerged as the engine of economic growth in China in the later period (2005-2010). The growing size and number of private enterprises are positively linked to growth. However, though foreign-invested enterprises have been acclaimed as the main contributors to economic growth in China, they have minimal effect on the economic growth in the later period. State-owned enterprises have a significant and negative effect on the economic growth in the later period. The results can be interpreted that the engine of growth in China has been changed over time from other ownerships to private ownership. Private companies have developed a lot in every respect and started to lead the economy for long-run growth. China initiated its economic growth by adopting foreign capital and it is still the top destination for foreign direct investment among developing countries. However, to sustain the growth over a long period, private sector should be of great importance and perform a key role in the view of catch-up economics.

Keywords

References

  1. ADB. (2003). The Development of Private Enterprise in China. Manila: Asian Development Bank.
  2. Amsden, A. (1989). Asia's Next Giant: South Korea and Late Indu strialization. Oxford: Oxford University Press.
  3. Amsden, A. and Chu, W. (2003). Beyond Late Development. MIT Press.
  4. Arellano, M. and Bover, O. (1995). Another Look at Instrumental Variable Estimation of Error-Component Models. Journal of Econometrics, 68, 29-51. https://doi.org/10.1016/0304-4076(94)01642-D
  5. Atherton, A. and Fairbanks, A. (2006). Stimulating Private Sector Development in China: the Emergence of Enterprise Development Centres in Liaoning and Sichuan Provinces. Asia Pacific Business Review, 12(3), 333-354. https://doi.org/10.1080/13602380500509097
  6. Audretsch, D. B. and Feldman, M. (1996). R&D Spillovers and the Geography of Innovation and Production. American Economic Review, 86(3), 630-640.
  7. Audretsch, D. B. and Keilbach, M. (2004). Entrepreneurship Capital and Economic Performance. Regional Studies, 38, 949-959. https://doi.org/10.1080/0034340042000280956
  8. Bai, C. E, Hsieh, C. T. and Qian, Y. (2006). The Returns to Capital in China. Brookings Papers on Economic Activity, 37 (2), 61-102.
  9. Barro, R. J. (1997). Determinants of Economic Growth: A Cross-Country Empirical Study. Cambridge, MA: The MIT Press.
  10. Braunstein, E. and G. Epstein. (2002), 'Bargaining Power and Foreign Direct Investment in China: Can 1.3 Billion Consumers Tame the Multinationals?', Working Paper. Amherst, MA: University of Massachusetts.
  11. Cao, Y., Qian, Y. and Weingast, B. R. (1999). From Federalism, Chinese Style to Privatization, Chinese Style. Economics of Transition, 7(1), 103-131. https://doi.org/10.1111/1468-0351.00006
  12. Caselli, F., Esquivel, G. and Lefort, F. (1996). Reopening the Convergence Debate: a New Look at Cross-country Growth Empirics. Journal of Economic Growth, 1(3), 363-389. https://doi.org/10.1007/BF00141044
  13. Chandler, A. D. Jr. (1977). The Visible Hand: the Managerial Revolution in American Business. Cambridge, UK: Belknap Press of Harvard University Press.
  14. Chandler, A. D. Jr. (1990). Scale and Scope: the Dynamics of Industrial Capitalism. Cambridge, MA: Harvard University Press.
  15. Chen, B. and Yi F. (2000). Determinants of economic growth in China: Private Enterprise, Education, and Openness. China Economic Review, 11(1), 1-15. https://doi.org/10.1016/S1043-951X(99)00014-0
  16. Chen, D. (2013). China's State-owned Enterprises: How Much Do We Know?: from CNOOC to Its Siblings. School of Public Policy. University of Calgary.
  17. Dees, S. (1998). Foreign Direct Investment in China: Determinants and Effects. Economics Planning, 31(2), 175-194. https://doi.org/10.1023/A:1003576930461
  18. Deller, S. and McConnon Jr, J. C. (2009). Microenterprises and Economic Growth: a Panel Study of the US States 1977-1997. Applied Economics Letters, 16(13), 1307-1312. https://doi.org/10.1080/13504850701367361
  19. Dobson, W. and Safarian, A. E. (2008). The Transition from Imitation to Innovation: An Enquiry into China's Evolving Institutions and Firm Capabilities. Journal of Asian Economics, 19(4), 301-311. https://doi.org/10.1016/j.asieco.2008.05.007
  20. Dollar, David. and Shang-Jin Wei. (2007). Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China. National Bureau of Economic Research Working Paper, 13103.
  21. Du, J., Liu, X. and Zhou, Y. (2014). State Advances and Private Retreats? - Evidence of Aggregate Productivity Decomposition in China. China Economic Review. Forthcoming.
  22. Elliott, R. and Zhou, Y. (2013). State-owned Enterprises, Exporting and Productivity in China: a Stochastic Dominance Approach, 36, 1000-1028. https://doi.org/10.1111/twec.12078
  23. Huang, Y. (1998). FDI in China: An Asian Perspective. Singapore: Institute of Southeast Asian Studies.
  24. Huang, Y. (2003). One Country, Two Systems: Foreign-invested Enterprises and Domestic Firms in China. China Economic Review, 14, 404-416. https://doi.org/10.1016/j.chieco.2003.09.011
  25. Islam, N. (1995). Growth Empirics: a Panel Data Approach. Quarterly Journal of Economics, 110, 1127-1170. https://doi.org/10.2307/2946651
  26. Jin, F, Lee, K. and Kim, Y. (2008). Changing Engines of Growth in China: from Exports, FDI and Marketization to Innovation and Exports. China and the World Economy, 16(2), 31-49. https://doi.org/10.1111/j.1749-124X.2008.00105.x
  27. Lee K., Kim B. Y. and Park Y. Y. (2013). Big Businesses and Economic Growth: Identifying a Binding Constraint for Growth with Country Panel Analysis. Journal of Comparative Economics, 41(2), 561-582. https://doi.org/10.1016/j.jce.2012.07.006
  28. Lee, K. and Mathews, J. (2010). From the Washington Consensus to the Best Consensus for World Development. Asian-Pacific Economic Literature, 24(1), 86-103. https://doi.org/10.1111/j.1467-8411.2010.01251.x
  29. Lee, K., M. Jee. and J. Eun. (2011). Assessing China's Economic Catch-up at the Firm-level and Beyond: Washington consensus, East Asian Consensus and the Beijing Model. Industry & Innovation, 18(5), 487-507. https://doi.org/10.1080/13662716.2011.583463
  30. Lee, K. and Kim, B. Y. (2009). Both Institutions and Policies Matter but Differently at Different Income Groups of Countries: Determinants of Long Run Economic Growth Revisited. World Development, 37(3), 533-549. https://doi.org/10.1016/j.worlddev.2008.07.004
  31. Li, H., Yang, Z., Yao, X., Zhang, H. and Zhang, J. (2012). Entrepreneurship, Private Economy and Growth: Evidence from China. China Economic Review, 23(4), 948-961. https://doi.org/10.1016/j.chieco.2012.04.015
  32. Lin, J. Y. (2012). Demystifying the Chinese economy. Cambridge University Press.
  33. Liu, X. H., Burridge, P. and Sinclair, P. J. N. (2002). Relationships between Economic Growth, Foreign Direct Investment and Trade: Evidence from China. Applied Economics, 34(11), 1433-1440. https://doi.org/10.1080/00036840110100835
  34. Mankiw, N. G., D. Romer. and D. N. Weil. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, 107, 407-437. https://doi.org/10.2307/2118477
  35. Naughton, B. (2007). The Chinese Economy: Transitions and Growth. MIT press.
  36. NBS. (various years). Chinese Industrial Enterprises Database. Beijing.
  37. NBS. (various years). Statistical Yearbook of China, China Statistical Publishing House. Beijing.
  38. NBS. http://www.stats.gov.cn
  39. OECD. (2005). Economic survey of China. Paris: OECD (www.oecd.org/eco/surveys/china)
  40. Poncet, S., Steingress, W. and Vandenbussche, H. (2010). Financial Constraints in China: Firm-level Evidence. China Economic Review, 21(3), 411-422. https://doi.org/10.1016/j.chieco.2010.03.001
  41. Ram, R. and Zhang, K. H. (2002). Foreign Direct Investment and Economic Growth: Evidence from Cross-Country Data for the 1990s. Economic Development and Cultural Change, 51(1), 205-215. https://doi.org/10.1086/345453
  42. Roodman, D. (2009). How to do xtabond2: An Introduction to Difference and System GMM in Stata. Stata Journal, 9(1), 86. https://doi.org/10.1177/1536867x0900900106
  43. Sachs, J. D. and Woo, W. T. (2001). Understanding China's Economic Performance. The Journal of Policy Reform, 4(1), 1-50. https://doi.org/10.1080/13841280008523412
  44. Schumpeter, J. A. (1934). The Theory of Economic Development. Cambridge, MA: Harvard University Press.
  45. Schumpeter, J. A. (1942). Capitalism, Socialism and Democracy. New York: George Allen & Unwin.
  46. Shan, J. (2002). A VAR Approach to the Economics of FDI in China. Applied Economics, 7, 885-893. https://doi.org/10.1080/00036840110058941
  47. Wade, R. (2004). Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (2nd ed). Princeton, NJ: Princeton University Press.(original edition published 1990).
  48. Wang, H. and Kimble, C. (2011). Leapfrogging to Electric Vehicles: Patterns and Scenarios for China's Automobile Industry. International Journal of Automotive Technology and Management, 11(4), 312-325. https://doi.org/10.1504/IJATM.2011.043164
  49. Wei, S. J. (1995). The Open Door Policy and China's Rapid Growth: Evidence from City Level Data. In I. Ito. and A. O. Krueger (Eds.), Growth Theories in Light of the East Asian Experience. Chicago: The University of Chicago Press.
  50. Xia, F. and Walker, G. (2014). How Much Does Owner Type Matter for Firm Performance? Manufacturing Firms in China 1998-2007. Strategic Management Journal. Forthcoming.
  51. Zhang, G. (2008). The Choice of Formal or Informal Finance: Evidence from Chengdu, China. China Economic Review, 19(4), 659-678. https://doi.org/10.1016/j.chieco.2008.09.001
  52. Zhang, K. H. (1999). How Does FDI Interact with Economic Growth in a Large Developing Country? The Case of China. Economic System, 23(4), 291-303. https://doi.org/10.1007/s001830050030
  53. Zhang, K. H. (2001). How Does Foreign Direct Investment Affect Economic Growth in China?. Economics of Transition, 9(3), 679-693. https://doi.org/10.1111/1468-0351.00095