The industrial reforms of the 1980s and early 1990s were accompanied by financial reforms beginning in the mid-1980s. These increased local financial autonomy and reduced the central government’s budgetary support for most firms. Even today, however, firms apply to the central government for budgetary assistance for their largest capital investments. The overall impact of the full set of reforms has been growth in the manufacturing sector at an average annual rate of fifteen percent since 1978. The early years, until 1985, were characterized by output growth from more efficient use of inputs (Li (1997)) and convergence of the marginal revenue.
