| Abstract: |
This paper applies a logistic smooth transition regression approach to the
estimation of a homogenous aggregate value added production function of the
State Owned (SOE) and Foreign-Funded Enterprises (FFE) in China, 1980s-2007.
The transition associated with the economic reforms in China is estimated
applying a curvilinear logistic function, where the speed and the timing of
the transition are endogenously determined by the data. We find high but
gradually declining markups in both SOEs and FFEs during the early stages of
the adjustment, with SOEs having a much larger scale and market size than the
FFEs. However, over the transition process, returns to scale in industrial
SOEs dropped sharply. For both FFEs and SOEs the transition is slow, with a
midpoint about 7 and 14 years, respectively. We find significant increase of
TFP growth rate for both FFEs and SOEs, by 0.1436 and 0.1971, respectively. |