• Economic governance

Economic governance

China’s state-guided economic miracle has revitalized a long-standing and unsettled debate about the role of government in transformative economic development. In this study of corporate governance the authors examine whether direct state involvement actually makes a positive contribution to the economic performance of newly incorporated firms in China’s urban economy. The document shows that direct intervention into the governance of firms is likely to yield negative economic effects at the firm level.

From their findings the authors infer that it is other types of government intervention external to the firm, that explain the success of China’s developmental state in promoting rapid economic growth. The study finds support for the political economy perspective emphasizing the state’s inability to provide positive economic effects through direct intervention at the firm level. Further findings include:

• tests do not indicate any positive economic effects of state involvement at firm level
• the study finds no support for the state-centred approach, which predicts that a decentralization of public asset management reduces the risk of negative economic effects
• the study does not find a qualitative difference between government interventions and party interventions. Both actors are characterized by clearly differing organizational features and incentive structures
  
  
  

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