Abstract
This study explores the impact of the Agricultural Leading Firms Program (ALFP) on the productivity of China’s agro-processing firms utilizing firm-level data from 1998–2013. The propensity score matching difference-in-differences method is used to control for endogeneity. We find that ALFP’s implementation promotes the productivity of agro-processing firms. However, this productivity enhancement occurs only in non-state-owned enterprises (non-SOEs); the productivity of SOEs is not affected. Regarding the underlying mechanisms, studies indicate that ALFP’s policy incentives for SOEs are mainly in the form of credit support and for non-SOEs as tax incentives and subsidies. Moreover, although policy incentives promote research and development expenditures by both SOEs and non-SOEs, credit support cannot alleviate the overinvestment of SOEs, while tax incentives and subsidies actually improve the investment efficiency of non-SOEs; this may cause the heterogeneous effects by ownership.
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