Industrial Policy, Productivity and Zombie Firms

Huang, Shaoqing; Xie, Weisi; Xu, Xiaoshu

doi:10.2139/ssrn.3820751

Cited by 2 publications

(2 citation statements)

References 27 publications

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“…Evidence from China also supports this point. Huang et al (2021) confirmed that the prevalence of zombie firms squeezed the marginal return of factors and increased the marginal cost of input factors of normal firms, thereby significantly reducing the TFP level at the industry level. Li et al (2021) analyzed the impact of zombie enterprises on the four sources of total TFP growth and verified that zombie enterprises can adversely affect TFP growth by hindering technological progress and deteriorating resource allocation.…”

Section: Introductionmentioning

confidence: 75%

The Role of Zombie Firms in Industrial Sustainable Development: Evidence From Yangtze River Delta Urban Agglomerations

Wang

Kong

Shi

2022

Front. Environ. Sci.

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The development of the regional economy is of major concern against the backdrop of the “new normal.” As a problem that has persisted in China for decades, zombie firms have a negative impact on regional and industrial sustainable development. This study first presents a novel method for identifying zombie firms and then analyzes the characteristics of zombie firms in the Yangtze River Delta Urban Agglomerations during a specified period. A fixed-effect model is used to examine the impact of firm zombification on normal enterprise investment. Despite the low level of zombification of industrial enterprises in the Yangtze River Delta Urban Agglomeration, the results of the study indicate that it has a considerable negative influence on enterprise investment. After applying multiple methods for robustness testing and constructing instrumental variables to solve the endogeneity problem, our results have remained stable. The carbon intensity effect and the competitive weakening effect are also examined as two impact mechanisms. Our findings have significant theoretical and practical ramifications: 1) It introduces a novel concept for defining zombie firms, which will aid in the improvement of the technique of identifying zombie firms based on the Chinese Industrial Enterprise Database; 2) It proposes a novel approach to zombie firm research, and it is critical to better understand the harmful effects of zombie firms on industrial sustainable development and to make specific efforts to address them; 3) It makes recommendations to the government on how to establish industrial policy. The policy tilt towards state-owned enterprises should be adjusted, while regional economic characteristics should be fully considered to ensure the sustainable development of the industry and the region.

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Section: Introductionmentioning

confidence: 75%

The Role of Zombie Firms in Industrial Sustainable Development: Evidence From Yangtze River Delta Urban Agglomerations

Wang

Kong

Shi

2022

Front. Environ. Sci.

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“…Consequently, this construction of the IV alleviates the concern that firms' resources are impacted by other provinces' zombie firms. Moreover, the method can also mitigate the concern that firms could be affected by the spillover of industrial policies implemented by adjacent cities (Huang et al., 2021). Since the regression model (PPML) is nonlinear, the control function (CF) method is more efficient than the standard IV method (Wooldrige, 2015).…”

Section: Estimation Resultsmentioning

confidence: 99%

Do zombie firms affect healthy firms' exporting? Evidence from China

Bu,

Du,

2023

Econ of Transit and Inst Chang

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This paper empirically investigates whether zombie firms affect healthy firms' exporting. Using the 1998–2007 Chinese firm‐level dataset, we provide strong evidence that zombie firms significantly decrease exports of healthy firms in each city‐industry cluster, that is, both whether to export and export values are affected by zombie firms. Specifically, non‐stated‐owned enterprises (non‐SOEs) are more vulnerable to the effect than their SOE counterparts. In addition, we also identify government subsidies, financial resources and total factor productivity as the sources of the effect, and the heterogeneous export performances of different types of firms are due to the variation in these sources.

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Industrial Policy, Productivity and Zombie Firms

Cited by 2 publications

References 27 publications

The Role of Zombie Firms in Industrial Sustainable Development: Evidence From Yangtze River Delta Urban Agglomerations

The Role of Zombie Firms in Industrial Sustainable Development: Evidence From Yangtze River Delta Urban Agglomerations

Do zombie firms affect healthy firms' exporting? Evidence from China

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