Jiangyong Lu

The Multitask Theory of State Enterprise Reform: Empirical Evidence from China

The degree of state ownership remains significant in the Chinese economy despite more than two decades of economic reform since 1979. Most of the remaining state- owned enterprises (SOEs) are money losing, and the few exceptional ones tend to be sheltered by government protection in selected industries. Yet China has been enjoying one of the most spectacular growth experiences in world history, and much of the growth is driven by non-state-owned enterprises (non-SOEs). Given the poor financial performance of SOEs, the co-existence of state ownership and non-state ownership in China is a puzzling phenomenon. Does state ownership exist solely for the benefit of politicians, or has state ownership played any role in Chinas spectacular growth? Is there any rationale behind Chinas gradual and selective approach towards privatizing its SOEs? What types of SOEs does the Chinese government choose to privatize? What are the consequences of privatization? In this paper, we offer a multitask theory of SOE reform in the context of China, which has predictions about the types of SOEs to be chosen for privatization and the results of privatization. We then present empirical evidence supporting the basic premise of the theory and its predictions.

Technological Capability Growth and Performance Outcome: Foreign Versus Local Firms in China

This study examines the growth and performance impact of technological capability (TC) in China. The authors posit that foreign and local firms exhibit different TC growth patterns and that TC has differential performance effects for these two types of firms. From a multilevel analysis of five-year panel data of 448 technology-oriented firms, they find that, in general, foreign firms possess higher levels of TC, whereas local firms can develop their TC faster than foreign firms. Furthermore, compared with foreign firms, local firms experience a stronger performance return from their TC; however, foreign firms have a higher growth rate in the contribution of TC to their performance over time. Moreover, firms can develop TC faster in regions with better intellectual property protection, and TC exerts a stronger effect on performance when industrial uncertainty is higher.

Intermediaries, Firm Heterogeneity and Exporting Behaviour

In this paper, we present one of the first work on the relation between firm productivity and exporting behaviour in the presence of intermediaries. Using a standard trade framework a la Melitz (2003, Econometrica, 71, 6, 1695) and Chaney (2009, American Economic Review, 98, 4, 1707), we find that the most productive firms have sales in the home country and also exporting directly to foreign countries, followed by firms with sales in the home country and exporting both directly and through intermediaries, by firms with sales in the home country and exporting through intermediaries, and finally by firms with sales in the home country only. These theoretical predictions are borne out in a data set of 12,679 firms in 29 developing economies during the 2002–06 period.

Pure Exporter: Theory and Evidence

This paper provides the first evidence about pure exporters (i.e., firms exporting all of their output to the foreign market) -- a phenomenon overlooked and cannot be explained in the existing literature. It then offers a generalized model of Melitz (2003) for examining the existence and behavior of pure exporters. In particular, pure exporters arise when the export market is sufficiently large -- a situation more likely to hold in developing countries as opposed to large developed countries; and their productivity levels are above those of non-exporters, but below those of firms having both domestic sales and export. These theoretical predictions are borne out in a data of Chinese manufacturing firms for the period of 1998-2005.

Chinese Migrants and their Impact on Homeland Development

This paper aims to systematically examine the impact of Chinese migrants on the economic activities of indigenous Chinese firms from two dimensions: foreign direct investment (FDI) by ethnic Chinese (ECI) and returnees. Using a unique data set for firms in Zhongguancun Science Park, Beijing, we carry out an in-depth empirical study on the effects of ECI and returnees on indigenous Chinese firms’ productivity, exports and R&D in comparison with the effects of non-ethnic Chinese FDI. The findings have important policy implications.