Efficiency, Technical Progress, and Best Practice in Chinese State Enterprises (1980-1994)
AbstractIn spite of rapid economic growth and swift structural change during the last two decades, China’s industrial reform is far from complete, especially with regard to state enterprises (SOEs). Although troubled with huge financial losses, heavy debt, and substantial over-staffing, SOEs will continue to play a crucial part in the government policy to maintain social stability and economic growth in China. This study, based on samples of about 700 state enterprises during 1980-94, investigates productivity performance of the SOEs using Data Envelopment Analysis and Malmquist Index. Our empirical results show that average technical efficiency had been low among the sample SOEs. Considerable productivity growth was found, but it was mainly accomplished through technical progress rather than efficiency improvement. Regression analyses indicate that wage incentives and education had positive impacts on productivity growth, while large scale was an important determinant of whether an SOE was applying best practice technology. It is also shown that large SOEs were more likely to generate technical progress. These findings are consistent with the industrial structural adjustment program initiated by the government in 1994, which has focused on improving productive efficiency via redundancies and technology upgrading, and on building its best SOEs into conglomerates.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 30.
Length: 28 pages
Date of creation: 27 Sep 2000
Date of revision:
Publication status: Published in Journal of Comparative Economics, 1998, pages 465-484.
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
Efficiency; productivity; technical progress; state enterprises; reform;
Other versions of this item:
- Zheng, Jinghai & Liu, Xiaoxuan & Bigsten, Arne, 2003. "Efficiency, technical progress, and best practice in Chinese state enterprises (1980-1994)," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 134-152, March.
- D20 - Microeconomics - - Production and Organizations - - - General
- P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
This paper has been announced in the following NEP Reports:
- NEP-EFF-2000-11-08 (Efficiency & Productivity)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wu Yanrui, 1994. "Productivity Growth, Technological Progress and Technical Efficiency Change in China: A Three-Sector Analysis," Chinese Economies Research Centre (CERC) Working Papers 1994-05, University of Adelaide, Chinese Economies Research Centre.
- Zhang, Anming & Zhang, Yimin & Zhao, Ronald, 2001. "Impact of Ownership and Competition on the Productivity of Chinese Enterprises," Journal of Comparative Economics, Elsevier, vol. 29(2), pages 327-346, June.
- Groves, Theodore & Yongmiao Hong & John McMillan & Barry Naughton, 1995. "China's Evolving Managerial Labor Market," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 873-92, August.
- Smyth, Russell, 2000. "Should China be Promoting Large-Scale Enterprises and Enterprise Groups?," World Development, Elsevier, vol. 28(4), pages 721-737, April.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990.
"Production frontiers with cross-sectional and time-series variation in efficiency levels,"
Journal of Econometrics,
Elsevier, vol. 46(1-2), pages 185-200.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers 89-18, C.V. Starr Center for Applied Economics, New York University.
- Lau, Kam-Tim & Brada, Josef C., 1990. "Technological progress and technical efficiency in Chinese industrial growth: A frontier production function approach," China Economic Review, Elsevier, vol. 1(2), pages 113-124.
- Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
- Mao, Weining & Koo, Won W., 1997. "Productivity growth, technological progress, and efficiency change in chinese agriculture after rural economic reforms: A DEA approach," China Economic Review, Elsevier, vol. 8(2), pages 157-174.
- Liu, Zinan & Liu, Guy Shaojia, 1996. "The Efficiency Impact of the Chinese Industrial Reforms in the 1980's," Journal of Comparative Economics, Elsevier, vol. 23(3), pages 237-255, December.
- Haishun Sun & Phillip Hone & Hristos Doucouliago, 1999. "Economic openness and technical efficiency: A case study of Chinese manufacturing industries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 615-636, November.
- Groves, Theodore, et al, 1994. "Autonomy and Incentives in Chinese State Enterprises," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 183-209, February.
- Lin, Justin Yifu & Cai, Fang & Li, Zhou, 1998. "Competition, Policy Burdens, and State-Owned Enterprise Reform," American Economic Review, American Economic Association, vol. 88(2), pages 422-27, May.
- Xiao-yuan Dong & Louis Putterman, 2001. "On the Emergence of Labour Redundancy in China's State Industry: Findings from a 1980-1994 Data Panel," Comparative Economic Studies, Palgrave Macmillan, vol. 43(2), pages 111-128, July.
- Lee, Young, 1997. "Bank Loans, Self-Financing, and Grants in Chinese SOEs: Optimal Policy under Incomplete Information," Journal of Comparative Economics, Elsevier, vol. 24(2), pages 140-160, April.
- Li, David D. & Liang, Minsong, 1998. "Causes of the Soft Budget Constraint: Evidence on Three Explanations," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 104-116, March.
- Guofu Tan & Justin Yifu Lin, 1999. "Policy Burdens, Accountability, and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 89(2), pages 426-431, May.
- Woo Wing Thye & Hai Wen & Jin Yibiao & Fan Gang, 1994. "How Successful Has Chinese Enterprise Reform Been? Pitfalls in Opposite Biases and Focus," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 410-437, June.
- Nolan, Peter & Xiaoqiang, Wang, 1999. "Beyond privatization: Institutional innovation and growth in China's large state-owned enterprises," World Development, Elsevier, vol. 27(1), pages 169-200, January.
- Fulvio Castellacci & Jinghai Zheng, 2010.
"Technological regimes, Schumpeterian patterns of innovation and firm-level productivity growth,"
Industrial and Corporate Change,
Oxford University Press, vol. 19(6), pages 1829-1865, December.
- Castellacci, Fulvio & Zheng, Jinghai, 2010. "Technological regimes, Schumpeterian patterns of innovation and firm level productivity growth," MPRA Paper 27588, University Library of Munich, Germany.
- Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2006.
"Can China’s Growth be Sustained? A Productivity Perspective,"
Working Papers in Economics
236, University of Gothenburg, Department of Economics.
- Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2009. "Can China's Growth be Sustained? A Productivity Perspective," World Development, Elsevier, vol. 37(4), pages 874-888, April.
- Yuk-Shing Cheng & Dic Lo, 2004. "Firm Size, Technical Efficiency and Productivity Growth in Chinese Industry," Working Papers 144, Department of Economics, SOAS, University of London, UK.
- Anwar, Sajid & Sun, Sizhong, 2012. "Trade liberalisation, market competition and wage inequality in China's manufacturing sector," Economic Modelling, Elsevier, vol. 29(4), pages 1268-1277.
- Watanabe, Michio & Tanaka, Katsuya, 2007. "Efficiency analysis of Chinese industry: A directional distance function approach," Energy Policy, Elsevier, vol. 35(12), pages 6323-6331, December.
- Yan Dong & John Whalley, 2009.
"Model Structure and the Combined Welfare and Trade Effects of China's Trade Related Policies,"
NBER Working Papers
15363, National Bureau of Economic Research, Inc.
- Dong Yan & Whalley John, 2011. "Model Structure and the Combined Welfare and Trade Effects of China's Trade Related Policies," Global Economy Journal, De Gruyter, vol. 10(4), pages 1-21, January.
- Deqiang Liu & Yanyun Zhao, 2006. "Ownership, Foreign Investment and Productivity--A Case Study of the Automotive Industry in China," Microeconomics Working Papers 21892, East Asian Bureau of Economic Research.
- Halkos, George Emmanuel & Tzeremes, Nickolaos G., 2007. "Productivity efficiency and firm size: An empirical analysis of foreign owned companies," International Business Review, Elsevier, vol. 16(6), pages 713-731, December.
- SebastiÃ¡n Claro, 2005. "How Uncompetitive is the State-Owned Industrial Sector in China," Documentos de Trabajo 305, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Sylviane Guillaumont Jeanneney & Ping Hua & Zhicheng Liang, 2011.
"Financial Development, Economic Efficiency and Productivity Growth: Evidence from China,"
- Sylviane GUILLAUMONT JEANNENEY & PING HUA & ZHICHENG LIANG, 2006. "Financial Development, Economic Efficiency, And Productivity Growth: Evidence From China," The Developing Economies, Institute of Developing Economies, vol. 44(1), pages 27-52.
- Zhicheng LIANG & Ping HUA & Sylviane GUILLAUMONT JEANNENEY, 2006. "Financial Development, Economic Efficiency and Productivity Growth: Evidence from China," Working Papers 200625, CERDI.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson).
If references are entirely missing, you can add them using this form.