On the Determinants of Industry Growth and Competition: Policy, Connections, and Technology
Open AccessThis dissertation explores the determinants of industry growth and competition through their interactions with policy, political connections and technology. Chapter 1 discusses the contexts and significance of the topics and presents an outline of the dissertation. Chapter 2 features empirical analyses on the interactions of political connections with the impact of industrial policy on firm productivity. The results are three fold: (i) tax subsidies improve firm performance, (ii) the magnitude of pro- ductivity improvement is smaller among politically connected firms than that among firms that are not politically connected, and (iii) firms in more R&D-intensive; indus- tries make better use of the tax subsidies that they receive. Chapter 3 presents a growth model to explain Chapter 2’s findings on the role of R&D; intensity or inno- vation as the underlying mechanism of the relationship between firm growth and tax subsidies. Chapter 4 discusses the data and econometric analyses on the technological determinants of industry competition. We find that the rate of capital depreciation is positively and significantly related to market power measured by markups. Chapter 5 provides a general equilibrium model to show that this stylized fact is consistent with the savings decisions in any standard intertemporal investment model. In the model, rapid depreciation is related to higher costs of capital, so that the industry can sup- port fewer firms in equilibrium. Chapter 6 concludes the dissertation. The findings in this dissertation provide important policy and academic insights into matters of economic development policy and industrial competitiveness.
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