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The performance of industrial productivity across regions of China: Structural differences, institutional shocks and dynamic characteristics

Author

Listed:
  • WANG Zheng

    (College of Economics, Zhejiang University, Hangzhou 310027, China)

  • ZHENG Jinghai

    (Department of Economics, Goteborg University, SE 405 30 Goteborg, Sweden)

  • SHI Jinchuan

    (Center for Research of Private Economy, Zhejiang University, Hangzhou 310027, China)

Abstract

This paper is dedicated to probing into the dynamic performances of industrial productivity across regions of transitional China, using the panel data of provincial level. Based on the approach by Kumbhakar (2000), TFP (total factor productivity) growth is decomposed into four components. The main results are as follows. First, since 1988, the industrial TFP growth has been commonly accelerated across regions, with a rising technical change rate as the principal impetus. Second, meanwhile, technical efficiency and factors' allocative efficiency are deteriorated with scale efficiency switching from being retrogressive to being progressive. Third, although the SOE (state-owned enterprise) reform in the late 1990s has constituted a common shock to the industrial productivity, the eastern area with relatively few SOEs suffers the least from this policy enforcement. Fourth, by exploring the sources of productivity differences, we further confirm that the institutional shock launched by SOE reform in the late 1990s is crucial for the enhancement of scale effects as well as the temporarily rapid decline of factors' allocative efficiency; in addition, the educational level of the labor-force and the share of non-SOEs in the industrial output contribute positively to the acceleration of technical change and the improvement of allocative efficiency. The economic transition, accompanied by gradual institutional reforms, is reshaping the map of regional industrialization through various channels.

Suggested Citation

  • WANG Zheng & ZHENG Jinghai & SHI Jinchuan, 2007. "The performance of industrial productivity across regions of China: Structural differences, institutional shocks and dynamic characteristics," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(3), pages 324-345, September.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:324-345
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0017-x
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    More about this item

    Keywords

    transition; industry; productivity; TFP; SOE reform;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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