Has the Reform of the Administrative Examination and Approval System Increased the Efficiency of Resource Allocation: Evidence from China

Based on data from the China Industry Business Performance Database from 1998 to 2007 and the time of establishment of the administrative examination and approval center in each administrative division in China, this study attempts to empirically determine the effects of the reform of the administrative examination and approval system on the efficiency of resource allocation from the perspectives of the degree of enterprise-level productivity dispersion. The empirical results showed that the reform of the administrative examination and approval system significantly reduced the degree of productivity dispersion among enterprises in an industry, in addition to enhancing the efficiency of resource allocation in the industry. A further analysis of heterogeneity revealed that the reform of the administrative examination and approval system yielded greater enhancements of the efficiency of resource allocation in industries with lower entry and exit rates.