IDEAS home Printed from https://ideas.repec.org/a/kap/jproda/v53y2020i1d10.1007_s11123-019-00563-8.html
   My bibliography  Save this article

Allocation of resources within subgroups of an industry: a case study in the Chinese industrial sector

Author

Listed:
  • Chun-kei Tsang

    (Hong Kong Baptist University
    Hong Kong Shue Yan University)

  • Sung-ko Li

    (Hong Kong Baptist University)

Abstract

Facing bottlenecks of economic growth, two important policy concerns of the Chinese government are the regional fragmentation and ownership distortion. This paper extends the method of measuring structural efficiency of a group of firms to the existence of subgroups of firms to evaluate such issue. Without knowing the “true” prices, we argue that there is an output-oriented solution to the economy. We then apply this new method to the Chinese industrial sector from 2005 to 2014 as a case study. We found that resources were allocated efficiently among different regions but not within regions. In contrast, resources were allocated efficiently within different ownerships but not among ownerships. Specifically, by eliminating inefficient resource allocation among different ownerships, outputs of the whole industrial sector could be increased by 21% of the observed levels. These two findings cannot be derived directly from other existing methods. Our results advocate different directions to conduct further regional and ownership reforms in China.

Suggested Citation

  • Chun-kei Tsang & Sung-ko Li, 2020. "Allocation of resources within subgroups of an industry: a case study in the Chinese industrial sector," Journal of Productivity Analysis, Springer, vol. 53(1), pages 125-139, February.
    • Handle: RePEc:kap:jproda:v:53:y:2020:i:1:d:10.1007_s11123-019-00563-8
    DOI: 10.1007/s11123-019-00563-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11123-019-00563-8
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11123-019-00563-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zheng Lu & Xiang Deng, 2013. "Regional Policy And Regional Development: A Case Study Of China'S Western Development Strategy," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 1-21.
    2. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. "The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    3. Sebastián Lozano & Gabriel Villa, 2004. "Centralized Resource Allocation Using Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 22(1), pages 143-161, July.
    4. ,, 2000. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 16(2), pages 287-299, April.
    5. Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2011. "Growing Like China," American Economic Review, American Economic Association, vol. 101(1), pages 196-233, February.
    6. Li, Sung-ko & Cheng, Yuk-shing, 2007. "Solving the puzzles of structural efficiency," European Journal of Operational Research, Elsevier, vol. 180(2), pages 713-722, July.
    7. Wing Thye Woo, 2012. "China meets the middle-income trap: the large potholes in the road to catching-up," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(4), pages 313-336, August.
    8. Forsund, Finn R & Hjalmarsson, Lennart, 1979. "Generalised Farrell Measures of Efficiency: An Application to Milk Processing in Swedish Dairy Plants," Economic Journal, Royal Economic Society, vol. 89(354), pages 294-315, June.
    9. Färe, Rolf & Karagiannis, Giannis, 2014. "A postscript on aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 233(3), pages 784-786.
    10. Peyrache, Antonio, 2013. "Industry structural inefficiency and potential gains from mergers and break-ups: A comprehensive approach," European Journal of Operational Research, Elsevier, vol. 230(2), pages 422-430.
    11. Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
    12. Justin Yifu Lin & Fan Zhang, 2015. "Sustaining Growth of the People's Republic of China," Asian Development Review, MIT Press, vol. 32(1), pages 31-48, March.
    13. Kuosmanen, Timo & Post, Thierry, 2001. "Measuring economic efficiency with incomplete price information: With an application to European commercial banks," European Journal of Operational Research, Elsevier, vol. 134(1), pages 43-58, October.
    14. Lant Pritchett & Lawrence H. Summers, 2013. "Asia-phoria meet regression to the mean," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-35.
    15. Ylvinger, Svante, 2000. "Industry performance and structural efficiency measures: Solutions to problems in firm models," European Journal of Operational Research, Elsevier, vol. 121(1), pages 164-174, February.
    16. Vladimir Nesterenko & Valentin Zelenyuk, 2007. "Measuring potential gains from reallocation of resources," Journal of Productivity Analysis, Springer, vol. 28(1), pages 107-116, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mingkai Liu & Changxin Liu & Xiaodong Pei & Shouting Zhang & Xun Ge & Hongyan Zhang & Yang Li, 2021. "Sustainable Risk Assessment of Resource Industry at Provincial Level in China," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    2. Cheng, Louis T.W. & Lee, Shu Kam & Li, Sung Ko & Tsang, Chun Kei, 2023. "Understanding resource deployment efficiency for ESG and financial performance: A DEA approach," Research in International Business and Finance, Elsevier, vol. 65(C).
    3. Cheng Zhang & Ziwei Zhao & Qunwei Wang, 2022. "Effect of Western Development Strategy on carbon productivity and its influencing mechanisms," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 4963-5002, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giannis Karagiannis, 2015. "On structural and average technical efficiency," Journal of Productivity Analysis, Springer, vol. 43(3), pages 259-267, June.
    2. Färe, Rolf & Karagiannis, Giannis, 2017. "The denominator rule for share-weighting aggregation," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1175-1180.
    3. Ali Homayoni & Reza Fallahnejad & Farhad Hosseinzadeh Lotfi, 2022. "Cross Malmquist Productivity Index in Data Envelopment Analysis," 4OR, Springer, vol. 20(4), pages 567-602, December.
    4. Cesaroni, Giovanni, 2020. "Technically and cost-efficient centralized allocations in data envelopment analysis," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    5. Fang, Lei & Li, Hecheng, 2013. "A comment on “solving the puzzles of structural efficiency”," European Journal of Operational Research, Elsevier, vol. 230(2), pages 444-446.
    6. Antonio Peyrache & Maria C. A. Silva, 2022. "Efficiency and Productivity Analysis from a System Perspective: Historical Overview," Springer Books, in: Duangkamon Chotikapanich & Alicia N. Rambaldi & Nicholas Rohde (ed.), Advances in Economic Measurement, chapter 0, pages 173-230, Springer.
    7. Antonio Peyrache & Maria C. A. Silva, 2019. "The Inefficiency of Production Systems and its decomposition," CEPA Working Papers Series WP052019, School of Economics, University of Queensland, Australia.
    8. Valentin Zelenyuk, 2022. "Aggregation of Efficiency and Productivity: From Firm to Sector and Higher Levels," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 25, pages 1039-1079, Springer.
    9. Zelenyuk, Valentin, 2015. "Aggregation of scale efficiency," European Journal of Operational Research, Elsevier, vol. 240(1), pages 269-277.
    10. Cesaroni, Giovanni, 2018. "Industry cost efficiency in data envelopment analysis," Socio-Economic Planning Sciences, Elsevier, vol. 61(C), pages 37-43.
    11. Färe, Rolf & Karagiannis, Giannis, 2014. "A postscript on aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 233(3), pages 784-786.
    12. Valentin Zelenyuk, 2018. "Some Mathematical and Historical Clarifications on Aggregation in Efficiency and Productivity Analysis and Connection to Economic Theory," CEPA Working Papers Series WP032018, School of Economics, University of Queensland, Australia.
    13. Walheer, Barnabé, 2019. "Aggregating Farrell efficiencies with private and public inputs," European Journal of Operational Research, Elsevier, vol. 276(3), pages 1170-1177.
    14. Andreas Mayer & Valentin Zelenyuk, 2018. "Aggregation of Individual Efficiency Measures and Productivity Indices," CEPA Working Papers Series WP012018, School of Economics, University of Queensland, Australia.
    15. Valentin Zelenyuk, 2021. "Performance Analysis: Economic Foundations & Trends," CEPA Working Papers Series WP162021, School of Economics, University of Queensland, Australia.
    16. Mayer, Andreas & Zelenyuk, Valentin, 2014. "Aggregation of Malmquist productivity indexes allowing for reallocation of resources," European Journal of Operational Research, Elsevier, vol. 238(3), pages 774-785.
    17. Antonio Peyrache & Maria C. A. Silva, 2023. "Efficiency decomposition for multi-level multi-components production technologies," Journal of Productivity Analysis, Springer, vol. 60(3), pages 273-294, December.
    18. Kuosmanen, Timo & Kortelainen, Mika & Sipiläinen, Timo & Cherchye, Laurens, 2010. "Firm and industry level profit efficiency analysis using absolute and uniform shadow prices," European Journal of Operational Research, Elsevier, vol. 202(2), pages 584-594, April.
    19. Barnabé Walheer, 2019. "Disaggregation for efficiency analysis," Journal of Productivity Analysis, Springer, vol. 51(2), pages 137-151, June.
    20. Badunenko, Oleg & Fritsch, Michael & Stephan, Andreas, 2008. "Allocative efficiency measurement revisited--Do we really need input prices?," Economic Modelling, Elsevier, vol. 25(5), pages 1093-1109, September.

    More about this item

    Keywords

    Chinese industrial sector; Revenue structural efficiency; Output-oriented structural efficiency; Western development strategy; Ownership reform;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:53:y:2020:i:1:d:10.1007_s11123-019-00563-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.