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Dong and Putterman's article

Posted by Sveta Novikova on November 22, 1998 at 16:15:16:

In Reply to: States and enterprises posted by Naa Norle Lokko on November 16, 1998 at 09:56:45:

: From the readings on China, I think its pretty clear that enterprises do very
: well when they are under private ownership. I'm yet to see a country where
: government-controlled enterprises compete at the same level as private enterprises.

Dong and Putterman seem to give just that example:
"Contrary to expectations based on some property rights theories,
[Ö] we find that enterprises owned by township and village
governments were at least as productive as those owned privately.
Indeed, for the sample studied, there is a statistically
significant efficiency difference in favor of the township- and
village-owned enterprises." I think, however, that Dong and
Puttermanís model is not enough to conclude that government-owned
and private enterprises can compete at the same level.
There are a lot of factors, which might have favored the
government-owned enterprises but were not controlled for in this
study. Although the researches accounted for loan access, we
donít find any mentioning of laws, regulations, taxation rules,
that treated private and public-owned businesses differently.
In my opinion, in order to compare their performance fairly,
we should first of all know how differently they were affected
by Chinese laws.


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