Industrial productivity performance in Chinese regions (1987–2002): a decomposition approach

Zheng, Jinghai, Wang, Zheng and Shi, Jinchuan (2008) Industrial productivity performance in Chinese regions (1987–2002): a decomposition approach. Journal of Chinese Economic and Business Studies, 6 (2). pp. 157-175. ISSN 1476-5284

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This article investigates the productivity performance of China's industries 1987–2002, by means of a provincial panel. Productivity growth is decomposed into four components: technical progress, scale efficiezncy change, and improvements in technical and allocative efficiency. Although total factor productivity growth had been the second major contributor to industrial growth (after capital accumulation), it has been driven mainly by technical progress rather than efficiency improvement. The estimated stochastic production frontier function exhibits substantial economies of scale. Regional differences in technical progress are negligible, but differences in technical efficiency are statistically significant across regions. The restructuring of state-owned enterprises from the mid-1990s seems to have improved technical efficiency considerably, while the performance of allocative efficiency does not seem to be converging towards standard conditions for optimizing firms under perfect competition. Factor price distortions, like artificially cheap capital together with suppressed wage levels, might have been the driving forces behind China's capital-intensive industrial growth and technology-dependent productivity performance.

Item Type: Article
Uncontrolled Keywords: transition, industry, productivity, TFP, SOE reform
Subjects: N100 Business studies
Department: Faculties > Business and Law > Newcastle Business School
Depositing User: Ellen Cole
Date Deposited: 20 Mar 2014 16:39
Last Modified: 19 Nov 2019 09:54

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