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

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  • Jinghai Zheng
  • Zheng Wang
  • Jinchuan Shi

Abstract

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.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Chinese Economic and Business Studies.

Volume (Year): 6 (2008)
Issue (Month): 2 ()
Pages: 157-175

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Handle: RePEc:taf:jocebs:v:6:y:2008:i:2:p:157-175

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Related research

Keywords: transition; industry; productivity; TFP; SOE reform;

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Cited by:
  1. Jose Miguel Albala-Bertrand, 2013. "Evolution of Structural Indicators. China and Regions: 1981-2010," Working Papers 701, Queen Mary, University of London, School of Economics and Finance.

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