Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/149323 
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper No. 6236
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Subordination of business to political influence has remains pervasive in China. We construct a Schumpeterian-type model of growth with managerial time allocation between productive activities and building up political connections. The model predicts the impact of different patterns of state ownership and/or political connectedness on firm productivity linked to a period of liberalization. We then investigate the relationship between political connections, state ownership, and total factor productivity (TFP) using firm-level data for China between 1998 and 2007. We find, consistent with the model, that the firms with the highest levels of TFP had low levels of political affiliation and/or state ownership.
Subjects: 
TFP
political connections
state ownership
China
JEL: 
D24
O14
O43
Document Type: 
Working Paper
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