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Modeling Private Sector Development in the People's Republic of China

dc.contributor.authorToshiki Kanamori
dc.contributor.authorZhijun Zhao
dc.description.abstractIn this paper, a simplified mathematical model based on the behavioral pattern of firms in the PRC is used to discuss the impact of marketization and privatization on private sector development. The model demonstrates that private enterprises, SOEs, and other entities undergoing reform in the PRC are entities with multiple objectives. This pattern of behavior leads to firms that tend to use more capital and labor to produce more output compared with pure profit-maximizing firms, but which earn fewer profits or even register losses. The impacts of firms’ non-profit objectives and the “costs of entry” on the size and number of firms are also discussed. The problem of matching between managerial ability and firm size is introduced to explain why gradual reform in PRC has succeeded, whereas the “Big Bang” in Russia failed.
dc.publisherAsian Development Bank Institute
dc.rightsCC BY 3.0 IGO
dc.titleModeling Private Sector Development in the People's Republic of China
dc.typeWorking Papers
dc.subject.expertFinancial & Private Sector Development
dc.subject.expertPrivate Sector Investments
dc.subject.expertPrivate Sector Participation
dc.subject.expertPrivate Sector Projects
dc.subject.expertPublic Sector Infrastructure
dc.subject.expertPublic Sector Management
dc.subject.expertPublic Sector Projects
dc.subject.adbPrivate enterprises
dc.subject.adbPrivate ownership
dc.subject.adbPublic enterprises
dc.subject.adbPublic finance
dc.subject.adbInfrastructure projects
dc.subject.adbDevelopment projects
dc.subject.adbFinancial loss
dc.subject.naturalCentral local government relations
dc.subject.naturalDecentralization in government
dc.subject.naturalSubnational governments
dc.subject.naturalGovernment monopolies
dc.subject.naturalIntergovernmental fiscal relations
dc.subject.naturalInvestment of public funds
dc.subject.naturalLocal finance
dc.subject.naturalGovernment services
dc.subject.naturalState governments
dc.subject.naturalMunicipal government
dc.subject.naturalBank failures
dc.title.seriesResearch Paper Series
dc.contributor.imprintAsian Development Bank
oar.themePrivate Sector
oar.themePublic Sector
oar.adminregionEast Asia Region
oar.countryPeople's Republic of China
oar.authorKanamori, Toshiki
oar.authorZhao, Zhijun

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    The Asian Development Bank Institute (ADBI) research paper series disseminate selected work in progress to facilitate an exchange of ideas within academic and policy communities. An objective of the series is to circulate primary findings promptly, regardless of the degree of finish. ADBI’s activities are guided by its three strategic priority themes of inclusive and sustainable growth, regional cooperation and integration, and governance for policies and institutions.

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