IESET.
Hypotheses·growth·hayek_calculation_problem_china_soe_capital_efficiency

In post-1992 China, sectors and provinces with persistently high state-owned-enterprise (SOE) shares of fixed-asset investment exhibit lower TFP growth and higher incremental capital-output ratios (ICOR — capital used per unit of additional output) than sectors and provinces dominated by private firms, after controlling for sector composition, urbanisation, and human capital.

The Mises-Hayek calculation-problem prediction is that SOEs lack the decentralised price-and-profit signals required to allocate capital efficiently and therefore systematically over-consume capital relative to private firms. Pre-registered claim is that the SOE share of investment is positively associated with provincial ICOR and negatively associated with provincial TFP growth at p<0.05 in a province-year panel 1992-2019.

INCONCLUSIVEengine/runs/hayek_calculation_problem_china_soe_capital_efficiency

INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['academic:china_provincial_tfp_estimates', 'constructed: provincial fixed_capital_formation / Δ provincial GDP, rolling 5y']

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. no outcome variable loaded; missing: ['academic:china_provincial_tfp_estimates', 'constructed: provincial fixed_capital_formation / Δ provincial GDP, rolling 5y']

why it matters

Growth claims can look convincing in single success stories. This test asks whether the pattern survives a broader comparison.

how the test works

It compares 1 country or place units from 1992 to 2019, using a panel fe design, with fixed effects for province and year.

what was measured
What changed
  • State-owned firms share fixed asset investment
What we checked
  • Provincial productivity growth 5y
  • Provincial icor 5y
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/hayek_calculation_problem_china_soe_capital_efficiency
1007550250199220062019CHN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show provincial_tfp_growth_5y across 1 sampled countries over 1992–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for hayek_calculation_problem_china_soe_capital_efficiency. Published chart will be generated from engine/runs/hayek_calculation_problem_china_soe_capital_efficiency/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:52:50Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

In post-1992 China, sectors and provinces with persistently high state-owned-enterprise (SOE) shares of fixed-asset investment exhibit lower TFP growth and higher incremental capital-output ratios (ICOR — capital used per unit of additional output) than sectors and provinces dominated by private firms, after controlling for sector composition, urbanisation, and human capital. The Mises-Hayek calculation-problem prediction is that SOEs lack the decentralised price-and-profit signals required to allocate capital efficiently and therefore systematically over-consume capital relative to private firms. Pre-registered claim is that the SOE share of investment is positively associated with provincial ICOR and negatively associated with provincial TFP growth at p<0.05 in a province-year panel 1992-2019.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if the panel-FE coefficient on SOE share is not significantly negative for TFP growth (p<0.05), OR not significantly positive for ICOR (p<0.05), OR if the magnitude of either is below 0.10 SD per 1-SD shift in SOE share.

formal test & threshold
test:      panel_fe_provincial_soe_share_tfp_icor
threshold: coefficient(soe_share → tfp_growth, province-year FE) < 0 at p<0.05 AND coefficient(soe_share → icor, province-year FE) > 0 at p<0.05 AND magnitudes >= 0.10 SD per 1-SD SOE-share shift

Method

Template
panel_fe
Fixed effects
province, year
Clustering
province
Sample
1 countries · 1992 – 2019
Evidence type
associational

Province-year panel with two-way FE, clustering by province. Outcome: provincial TFP growth and provincial ICOR. Treatment: SOE share of investment. The Hayekian prediction is that the SOE share negatively predicts TFP growth and positively predicts ICOR. Heterodox/developmental-state readers (Lin Justin Yifu, Ang) argue that SOEs deliver coordination externalities (infrastructure, upstream supply chains) that PWT/provincial TFP measures underweight, and that SOE-heavy regions also tend to be heavy- industry regions where measurement issues are largest.

Data

VariableSourceTransform
provincial_tfp_growth_5y
outcome
academic:china_provincial_tfp_estimatestier 4
log_diff_5y
provincial_icor_5y
outcome
constructed:provincial fixed_capital_formation / Δ provincial GDP, rolling 5ytier 5
level
soe_share_fixed_asset_investment
treatment
academic:china_provincial_soe_investment_sharetier 4
level
provincial_urbanisation_rate
control
academic:china_provincial_paneltier 4
level
provincial_education_attainment
control
academic:china_provincial_paneltier 4
level
provincial_export_share_gdp
control
academic:china_provincial_paneltier 4
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — hayek_calculation_problem_china_soe_capital_efficiency

Verdict: INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['academic:china_provincial_tfp_estimates', 'constructed: provincial fixed_capital_formation / Δ provincial GDP, rolling 5y']

Pre-registration

  • Claim: In post-1992 China, sectors and provinces with persistently high state-owned-enterprise (SOE) shares of fixed-asset investment exhibit lower TFP growth and higher incremental capital-output ratios (ICOR — capital used per unit of additional output) than sectors and provinces dominated by private firms, after controlling for sector composition, urbanisation, and human capital. The Mises-Hayek calculation-problem prediction is that SOEs lack the decentralised price-and-profit signals required to allocate capital efficiently and therefore systematically over-consume capital relative to private firms. Pre-registered claim is that the SOE share of investment is positively associated with provincial ICOR and negatively associated with provincial TFP growth at p<0.05 in a province-year panel 1992-2019.
  • Falsification rule: The hypothesis is falsified if the panel-FE coefficient on SOE share is not significantly negative for TFP growth (p<0.05), OR not significantly positive for ICOR (p<0.05), OR if the magnitude of either is below 0.10 SD per 1-SD shift in SOE share.
  • Falsification test: panel_fe_provincial_soe_share_tfp_icor

Estimate

  • Error: no outcome variable loaded; missing: ['academic:china_provincial_tfp_estimates', 'constructed: provincial fixed_capital_formation / Δ provincial GDP, rolling 5y']

Variables resolved

Variables missing data

  • academic:china_provincial_tfp_estimates (outcome, name=provincial_tfp_growth_5y) — vintage not on disk
  • constructed: provincial fixed_capital_formation / Δ provincial GDP, rolling 5y (outcome, name=provincial_icor_5y) — vintage not on disk
  • academic:china_provincial_soe_investment_share (treatment, name=soe_share_fixed_asset_investment) — vintage not on disk
  • academic:china_provincial_panel (controls, name=provincial_urbanisation_rate) — vintage not on disk
  • academic:china_provincial_panel (controls, name=provincial_education_attainment) — vintage not on disk
  • academic:china_provincial_panel (controls, name=provincial_export_share_gdp) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:50+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Mises (1920 "Economic Calculation in the Socialist Commonwealth"), Hayek (1945 "The Use of Knowledge in Society"). Modern China- specific empirics: Brandt-Van Biesebroeck-Zhang on factor reallocation, Hsieh-Klenow on misallocation. TODO: provincial TFP and SOE-share data are currently sourced from academic reconstructions; if the framework registers a CSY (China Statistical Yearbook) publisher these would graduate to a primary publisher citation.

Authored framework. Read the transparency note.