Working Paper: CEPR ID: DP1900
Authors: Thorvaldur Gylfason; Tryggvi Thor Herbertsson; Gylfi Zoega
Abstract: This paper introduces state-owned enterprises into an endogenous-growth model with an expanding variety of inputs. It shows that, if state firms are less efficient than private firms in organizing labour and also in adopting new technology, the rate of innovation and, hence, also the rate of growth of output will be lower in the long run, ceteris paribus, because the rate of innovation is adversely affected. The model is tested on cross-section data for about 75 industrial and developing countries over the period 1978?92. We find that the size of state-owned sector is inversely related to total factor productivity and economic growth.
Keywords: endogenous growth; state-owned enterprises; static and dynamic efficiency
JEL Codes: O41; P12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| size of the state-owned sector (L32) | total factor productivity (D24) |
| size of the state-owned sector (L32) | economic growth (O49) |
| size of the state-owned sector (L32) | innovation rate (O35) |
| innovation rate (O35) | economic growth (O49) |
| size of the state-owned sector (L32) | efficiency of SOEs (L32) |
| efficiency of SOEs (L32) | total factor productivity (D24) |
| efficiency of SOEs (L32) | economic growth (O49) |
| computer usage (C89) | economic growth (O49) |