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Technology Progress, Efficiency, and Scale of Economy in Post-reform China

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  • Kui-Wai Li

    () (City University of Hong Kong, Hong Kong SAR)

  • Tung Liu

    () (Department of Economics, Ball State University)

  • Lihong Yun

    () (City University of Hong Kong, Hong Kong SAR)

Abstract

This paper analyzes the productivity change of the thirty provinces in China’s post-reform economy. The productivity change is estimated from the stochastic frontier model, in which the maximum likelihood estimation is applied to an augmented logarithmic production function incorporated with a human capital variable. The empirical results show technical progress is the main contributor to productivity growth and the scale of economy became important in recent years, but technical efficiency has edged downwards in the sample period. We also found that the physical capital is the important factor for economic growth and human capital is inadequate even though it has a positive and significant effect on growth. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.

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File URL: http://econfac.iweb.bsu.edu/research/workingpapers/bsuecwp200701li.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200701.

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Length: 23 pages
Date of creation: Apr 2007
Date of revision: Apr 2007
Publication status: Published see BSUECWP200806
Handle: RePEc:bsu:wpaper:200701

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Keywords: technical efficiency; technical progress; human capital; China economy;

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