Working Paper: NBER ID: w18048
Authors: Philippe Aghion; Mathias Dewatripont; Luosha Du; Ann Harrison; Patrick Legros
Abstract: Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2007, we show that industrial policies allocated to competitive sectors or that foster competition in a sector increase productivity growth. We measure competition using the Lerner Index and include as industrial policies subsidies, tax holidays, loans, and tariffs. Measures to foster competition include policies that are more dispersed across firms in a sector or measures that encourage younger and more productive enterprises.
Keywords: industrial policy; competition; productivity growth; Lerner index; China
JEL Codes: D2; L5; L6; O2; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| industrial policies targeted towards competitive sectors (L52) | productivity growth (O49) |
| competition (measured by the Lerner index) (L13) | productivity growth (O49) |
| industrial policies (like subsidies and tax holidays) (O25) | competition (measured by the Lerner index) (L13) |
| more dispersed industrial policies across firms in a sector (L59) | productivity growth (O49) |
| measures that support younger, more productive enterprises (L26) | productivity growth (O49) |
| properly designed sectoral policies (L52) | competition (L13) |
| competition (L13) | innovation (O35) |
| properly designed sectoral policies (L52) | productivity growth (O49) |