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Resource allocation and productivity across provinces in China

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  • Bin, Peng
  • Chen, Xiaolan
  • Fracasso, Andrea
  • Tomasi, Chiara

Abstract

The rapid economic development in China has been characterized by levels of productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative efficiency across provinces over the period 1998–2007. Using firm-level data on the Chinese manufacturing firms, we measure resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that allocative efficiency varies considerably across areas and that some place-based factors strongly influence the distribution of resources across firms.

Suggested Citation

  • Bin, Peng & Chen, Xiaolan & Fracasso, Andrea & Tomasi, Chiara, 2018. "Resource allocation and productivity across provinces in China," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 103-113.
    • Handle: RePEc:eee:reveco:v:57:y:2018:i:c:p:103-113
    DOI: 10.1016/j.iref.2018.02.015
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    Cited by:

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    2. Shiying Hou & Liangrong Song, 2021. "Market Integration and Regional Green Total Factor Productivity: Evidence from China’s Province-Level Data," Sustainability, MDPI, vol. 13(2), pages 1-19, January.
    3. Xianpu Xu & Xiawan Li & Lin Zheng, 2022. "A Blessing or a Curse? Exploring the Impact of Environmental Regulation on China’s Regional Green Development from the Perspective of Governance Transformation," IJERPH, MDPI, vol. 19(3), pages 1-24, January.
    4. Liu, Yajie & Cui, Lijuan & Xiong, Yanyan & Yao, Xianguo, 2023. "Does the development of the Internet improve the allocative efficiency of production factors? Evidence from surveys of Chinese manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 161-174.
    5. Laiqun Jin & Changwei Mo & Bochao Zhang & Bing Yu, 2018. "What Is the Focus of Structural Reform in China?—Comparison of the Factor Misallocation Degree within the Manufacturing Industry with a Unified Model," Sustainability, MDPI, vol. 10(11), pages 1-19, November.
    6. Andrea Fracasso & Kun Jiang, 2022. "The performance of private companies in China before and during the global financial crisis: firms’ characteristics and entrepreneurs’ attributes," Economic Change and Restructuring, Springer, vol. 55(2), pages 803-836, May.

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    More about this item

    Keywords

    Allocative efficiency; Resource allocation; Regional disparities; China;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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