Privatization and productivity in China

We study how ownership affects productivity in the context of China's privatization state-owned enterprises (SOEs). Its true impact remains unclear and controversial, partly because government selectively privatized or liquidated nonperforming SOEs. To address this selection problem, we augment Gandhi–Navarro–Rivers nonparametric production function to incorporate endogenous changes. Results suggest private firms are 53% more productive than SOEs on average, but benefits take several years fully materialize. This gap is smaller among larger economically liberal times places; it consumer-facing high-tech industries.