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The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007

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  • Sai Ding
  • Alessandra Guariglia
  • Richard Harris

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Abstract

Using a large firm-level dataset, this paper examines total factor productivity (TFP) and its determinants in China. Our preferred GMM estimation results indicate increasing returns to scale in most industries and a usually large positive trend representing technical change. Various firm characteristics such as age, ownership, political affiliation, export behavior, liquidity, and geographic location are included in the production function. Our results show that in the context of China’s institutional background, including such factors is important when estimating TFP. The average TFP growth in Chinese industries is 9.6 % per annum during the period 1998–2007, and is mainly driven by firm entry. The sub-sector decomposition exercises show that the inter-firm resource reallocations are more prominent across industries than across provinces. Copyright The Author(s) 2016

Suggested Citation

  • Sai Ding & Alessandra Guariglia & Richard Harris, 2016. "The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007," Journal of Productivity Analysis, Springer, vol. 45(2), pages 131-155, April.
  • Handle: RePEc:kap:jproda:v:45:y:2016:i:2:p:131-155
    DOI: 10.1007/s11123-015-0460-0
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    1. repec:eee:reveco:v:57:y:2018:i:c:p:103-113 is not listed on IDEAS
    2. 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.
    3. repec:eee:corfin:v:52:y:2018:i:c:p:214-237 is not listed on IDEAS
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    5. Marco Bee & Maria Michela Dickson & Flavio Santi, 2018. "Likelihood-based risk estimation for variance-gamma models," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 27(1), pages 69-89, March.
    6. Stephen Gibbons & Wenjie Wu, 2017. "Airports, Market Access and Local Economic Performance: Evidence from China," SERC Discussion Papers 0211, Spatial Economics Research Centre, LSE.
    7. Gabriella Berloffa & Eleonora Matteazzi & Paola Villa, 2017. "The intergenerational transmission of worklessness in Europe.The role of fathers and mothers," DEM Working Papers 2017/04, Department of Economics and Management.
    8. C.J. O’Donnell, 2017. "Estimating Total Factor Productivity Change When No Price or Value-Share Data are Available," CEPA Working Papers Series WP012017, School of Economics, University of Queensland, Australia.
    9. Gabriella Berloffa & Eleonora Matteazzi & Alina Sandor & Paola Villa, 2017. "The quality of employment in the early labour market experience of young Europeans," DEM Working Papers 2017/05, Department of Economics and Management.
    10. Gibbons, Stephen & Wu, Wenjie, 2017. "Airports, market access and local economic performance: Evidence from China," LSE Research Online Documents on Economics 83630, London School of Economics and Political Science, LSE Library.
    11. repec:kap:jproda:v:50:y:2018:i:1:d:10.1007_s11123-018-0532-z is not listed on IDEAS

    More about this item

    Keywords

    TFP; Productivity decomposition; Entry; Exit; Reallocation of resources; China; D24; O14;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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