By tracking more than 3000 manufacturing firms established in 1999 in China over a span of 10 years, we examined whether the status of firm survival differs in China from the so-called stylized fact that has been established in studies for other countries. We also analyzed the unique effects of ownership and productivity on firm survival in a transitional economy. The empirical evidence suggests that although the state-owned firms are still under the protection from the Chinese government, productivity influences firm survival, the effects of government protection and market selection shift over time and in various growth rate sectors, and productivity exerts a different influence on exit This paper again confirms again that some evidence independent of various institutions and policies establishes the “natural law” of industrial dynamics, and “good” economy transition can make room for market selection.
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