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DOES MARKET-ORIENTED ECONOMIC TRANSITION ENHANCE ENTERPRISE PRODUCTIVITY? EVIDENCE FROM CHINA'S ENTERPRISES

Authors


  • The authors wish to express out gratitude to Professor Yinxing Hong from Nanjing University and Professor Hiroshi Ohta from Aoyama Gakuin University for valuable feedback and comments. We are also grateful for the comments from seminar participants from Aoyama Gakuin University, Nihon University and Renmin University of China. Two research grants from the Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin University of China (projects 10XNK053 and 10XNK059) are gratefully acknowledged. The comments from an anonymous referee are also greatly appreciated.

Graduate School of Business, Nihon University, Tokyo 102-8275, Japan. E-mail: li.ke@nihon-u.ac.jp.

Abstract

Using a panel of China's enterprises from 1999 to 2007, this paper examined how market-oriented economic transition affects the productivity of China's enterprises given the various stages of enterprises in the commercialization process and given the market segmentation among Chinese different regions. The main findings are that: (i) enterprises with higher degrees of commercialization have relatively higher productivity, whereas enterprises with higher degrees of market segmentation have relatively lower productivity; (ii) the commercialization process and market segmentation act indirectly affect productivity through enterprises' capacity to export, innovate and obtain business loans; and (iii) the indirect effects are found to be significantly different between the commercialization process and market segmentation, highlighting the effects of the market-oriented economic transition on enterprises' productivity. This paper provides reliable enterprise-level evidence regarding the sources and evolution of enterprise productivity during different stages of market-oriented economic transition in China.

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