The Ownership School vs. the Management School of State Enterprise Reform: Evidence from China

There are two schools of thoughts on the important issue of reforming state-owned enterprises (SOEs). We call them the ownership school and the management school. The ownership school argues that the key to the reform is to diversify SOEs' ownership, including privatization, in order to eliminate government control of SOEs. The management school emphasizes the need to improve government's management of SOEs by, for example, granting SOE employees autonomy and profit incentives. Utilizing a data set of 680 SOEs in China, covering the period of 1980 to 1994, we test the relative effectiveness of these two kinds of reform measures. This is possible due to the fact that reform measures based on each of these two schools of thoughts were practised in China. Our results yield strong support for the ownership school while leaving very mixed evidence for the management school. Moreover, we find that the impact of ownership diversification was of the same order of magnitude on the economic performance of state enterprises as that of enhancing product market competition.http://deepblue.lib.umich.edu/bitstream/2027.42/39819/3/wp435.pd

The Ownership School vs. the Management School of State Enterprise Reform: Evidence from China

There are two schools of thoughts on the important issue of reforming state-owned enterprises (SOEs). We call them the ownership school and the management school. The ownership school argues that the key to the reform is to diversify SOEs' ownership, including privatization, in order to eliminate government control of SOEs. The management school emphasizes the need to improve government's management of SOEs by, for example, granting SOE employees autonomy and profit incentives. Utilizing a data set of 680 SOEs in China, covering the period of 1980 to 1994, we test the relative effectiveness of these two kinds of reform measures. This is possible due to the fact that reform measures based on each of these two schools of thoughts were practised in China. Our results yield strong support for the ownership school while leaving very mixed evidence for the management school. Moreover, we find that the impact of ownership diversification was of the same order of magnitude on the economic performance of state enterprises as that of enhancing product market competition.State-Owned Enterprise, Privatization, Gradual Privatization, Managerial Reform, Enterprise Restructuring, Managerial Autonomy, and Managerial Incentives

The Colour of the Cats

China has experimented with two strategies of reform of its state-owned enterprises (SOE). One is diversification of SOEs’ ownership through introducing non-state sources of investment. Another is to improve the management of SOEs by granting SOEs’ managers autonomy and their employees profit incentives. Utilising a data set on 680 SOEs over 1980-94, we tested the relative effectiveness of two kinds of reform measures. Our results show that ownership diversification had a significant impact on the performance of SOEs while efforts to improve SOE’s management had very little effect. Moreover, the impact of ownership diversification on SOE’s economic performance was as strong as that of enhancing product market competition.

Cryptanalysis of a new chaotic cryptosystem based on ergodicity

This paper analyzes the security of a recent cryptosystem based on the ergodicity property of chaotic maps. It is shown how to obtain the secret key using a chosen-ciphertext attack. Some other design weaknesses are also shown.Comment: 10 pages, 5 figure

Limiting Government Predation Through Anonymous Banking: A Theory with Evidence from China

China's economic performance of the past two decades presents a puzzle for the economics of transition and development: Enormous private business incentives were unleashed that have fueled rapid economic growth despite the fact that China has had very weak "conventional institutions" (such as the rule of law and separation of powers) to constrain the government from arbitrary intrusion into economic activities. We argue that one mechanism that has limited the government's ability for predation and harassment is commitment through information decentralization, where the key institutiton is "anonymous banking," that is, a combination of the use of cash for transactions and the use of anonymous savings deposits. The government's incentive for such a mechanism comes form the increased quasi-fiscal revenues collected from the state banking system through "financial repression," a combination of controls on international capital flows with restrictions on domestic interest rates. The major features of China's economy concerning its fiscal decline, financial deepening, and the sectoral dual-track can be better understood using this analytical framework.http://deepblue.lib.umich.edu/bitstream/2027.42/39659/3/wp275.pd

A Multi-Task Theory of the State Enterprise Reform

During transition, maintaining employment and providing a social safety net to the unemployed are important to social stability, which in turn is crucial for the productivity of the whole economy. Because independent institutions for social safety are lacking and firms with strong profit incentives have little incentives to promote social stability due to its public good nature, state-owned enterprises (SOEs) are needed to continue their role in providing social welfare. Charged with the multi-tasks of efficient production as well as social welfare provision, SOEs continue to be given low profit incentives and consequently, their financial performance continues to be poor.http://deepblue.lib.umich.edu/bitstream/2027.42/39751/3/wp367.pd

The Causality of Foreign Direct Investment and Its Effects on Economic Growth: Re-estimated by a Directed Graph Approach

This paper uses the directed acyclic graph approach to analyze the causal patterns among foreign direct investment and other economic, social, and political variables, including GDP per capita as a proxy for economic growth. We find that economic growth causes FDI inflows for developing countries, while FDI induces economic growth for developed countries. Also, stock market is found to be an intermediary that amplifies the influence on FDI from many causal variables of FDI.FDI, economic growth, DAG, Financial Economics,