Abstract
This paper considers the impact of state-owned enterprises on economic growth in China. We consider several possible channels through which state-owned enterprises might play a pro-growth role: first, stabilizing growth in economic downturns by carrying out massive investments; second, promoting technical progress by investing in riskier areas of technology; third, by following a high-road approach to treating workers by paying a living wage which is favorable for China to move toward a more sustainable growth model in the future. Our empirical analysis finds that a higher share of state-owned enterprises is favorable to long-run growth and tends to offset the adverse effect of economic downturns on the regional level.JEL Classification: E11, O47, P31
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