Post date: Feb 05, 2013 10:44:6 PM
"Insecure Property Rights and Government Ownership of Firms" by Jiahua Che and Yingyi Qian.
One important component of the Great Reform in China is the ownership structure of enterprises. From 1954-1981, all the enterprises are owned by the government (SOE); afterwards, the ownership had been gradually transit to private+state owned. During the reform, the central government gave away part of the control of the national income. We've seen many papers discussing Deng's reform. Before the reform, the central government has control over every aspect of the economy such as income, consumption, production, political right and even human right. Deng's idea is to relax the control of the first three aspect in the expect of a more rapid economic growth. However, political or institutional reform is not part of the plan. This paper is similar to the dual track paper by Qian. It considers how the reform of the ownership structure redistribute the income and reshape the production. It would be more interesting if it interacts with the institutional structure.
Again, principle and agent type model is employed to address this issue. I'm wondering why many Chinese economists model government as principle, firms as agent. Is this also the Chinese style economics:)