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Industrial productivity performance in Chinese regions (1987-2002): a decomposition approach

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  • Jinghai Zheng
  • Zheng Wang
  • Jinchuan Shi

Abstract

This article investigates the productivity performance of China's industries 1987-2002, by means of a provincial panel. Productivity growth is decomposed into four components: technical progress, scale efficiezncy change, and improvements in technical and allocative efficiency. Although total factor productivity growth had been the second major contributor to industrial growth (after capital accumulation), it has been driven mainly by technical progress rather than efficiency improvement. The estimated stochastic production frontier function exhibits substantial economies of scale. Regional differences in technical progress are negligible, but differences in technical efficiency are statistically significant across regions. The restructuring of state-owned enterprises from the mid-1990s seems to have improved technical efficiency considerably, while the performance of allocative efficiency does not seem to be converging towards standard conditions for optimizing firms under perfect competition. Factor price distortions, like artificially cheap capital together with suppressed wage levels, might have been the driving forces behind China's capital-intensive industrial growth and technology-dependent productivity performance.

Suggested Citation

  • Jinghai Zheng & Zheng Wang & Jinchuan Shi, 2008. "Industrial productivity performance in Chinese regions (1987-2002): a decomposition approach," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 6(2), pages 157-175.
  • Handle: RePEc:taf:jocebs:v:6:y:2008:i:2:p:157-175 DOI: 10.1080/14765280802028278
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    References listed on IDEAS

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    Cited by:

    1. repec:eme:ceftpp:v:9:y:2016:i:2:p:146-170 is not listed on IDEAS
    2. Jose Miguel Albala-Bertrand, 2013. "Evolution of Structural Indicators. China and Regions: 1981-2010," Working Papers 701, Queen Mary University of London, School of Economics and Finance.
    3. J.M. Albala-Bertrand, 2016. "Structural change in industrial output: China 1995-2010," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 9(2), pages 146-170, June.
    4. Yanrui Wu & Zhao Dingtao, 2011. "Global Integration and Agricultural Productivity in China," Chapters,in: Globalisation, Agriculture and Development, chapter 7 Edward Elgar Publishing.
    5. Jose-Miguel Albala-Bertrand, 2016. "Industrial Interdependence: China 1995-2010," Working Papers 802, Queen Mary University of London, School of Economics and Finance.
    6. Maria Jesus Herrerias & Vicente Orts, 2011. "The driving forces behind China’s growth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 79-124, January.

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    Keywords

    transition; industry; productivity; TFP; SOE reform;

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