IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Technology Progress, Efficiency, and Scale of Economy in Post-reform China

  • Kui-Wai Li


    (City University of Hong Kong, Hong Kong SAR)

  • Tung Liu


    (Department of Economics, Ball State University)

  • Lihong Yun


    (City University of Hong Kong, Hong Kong SAR)

This paper analyzes the productivity change of the thirty provinces in China’s post-reform economy. The productivity change is estimated from the stochastic frontier model, in which the maximum likelihood estimation is applied to an augmented logarithmic production function incorporated with a human capital variable. The empirical results show technical progress is the main contributor to productivity growth and the scale of economy became important in recent years, but technical efficiency has edged downwards in the sample period. We also found that the physical capital is the important factor for economic growth and human capital is inadequate even though it has a positive and significant effect on growth. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.

If 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.

File URL:
File Function: First version, 2007
Download Restriction: no

Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200701.

in new window

Length: 23 pages
Date of creation: Apr 2007
Date of revision: Apr 2007
Publication status: Published see BSUECWP200806
Handle: RePEc:bsu:wpaper:200701
Contact details of provider: Postal: Muncie, Indiana 47306
Phone: (765) 285-5360
Fax: (765) 285-8024
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Yao, S. & Zhang, Z., 1999. "Regional Growth in Chine under Economic Reforms," Papers 124, Portsmouth University - Department of Economics.
  2. Jess Benhabib & Mark M. Spiegel, 2002. "Human capital and technology diffusion," Working Paper Series 2003-02, Federal Reserve Bank of San Francisco.
  3. Oded Galor & Omer Moav, 2004. "Das Human Kapital: A Theory of the Demise of the Class Structure," GE, Growth, Math methods 0410003, EconWPA.
  4. Holz, Carsten A., 2004. "Deconstructing China's GDP statistics," China Economic Review, Elsevier, vol. 15(2), pages 164-202.
  5. Xiaolan Fu, 2005. "Exports, technical progress and productivity growth in a transition economy: a non-parametric approach for China," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 725-739.
  6. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
  7. Chow, Gregory C, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 809-42, August.
  8. Carsten A. Holz, 2005. "New Capital Estimates for China," Development and Comp Systems 0504011, EconWPA.
  9. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
  10. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
  11. Gemmell, Norman, 1996. "Evaluating the Impacts of Human Capital Stocks and Accumulation on Economic Growth: Some New Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 9-28, February.
  12. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2004. "Growth, distance to frontier and composition of human capital," IFS Working Papers W04/31, Institute for Fiscal Studies.
  13. Rawski, Thomas G. & Xiao, Wei, 2001. "Roundtable on Chinese Economic Statistics Introduction," China Economic Review, Elsevier, vol. 12(4), pages 298-302.
  14. Lawrence F. Katz & Claudia Goldin, 2001. "The Legacy of U.S. Educational Leadership: Notes on Distribution and Economic Growth in the 20th Century," American Economic Review, American Economic Association, vol. 91(2), pages 18-23, May.
  15. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
  16. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
  17. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  18. Liu, Tung & Li, Kui-Wai, 2001. "Impact of liberalization of financial resources in China's economic growth: evidence from provinces," Journal of Asian Economics, Elsevier, vol. 12(2), pages 245-262.
  19. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-63, July.
  20. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
  21. repec:cup:cbooks:9780521803694 is not listed on IDEAS
  22. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
  23. Yanrui Wu, 2003. "Has Productivity Contributed to China's Growth?," Pacific Economic Review, Wiley Blackwell, vol. 8(1), pages 15-30, 01.
  24. Tung Liu & Kui-Wai Li, 2005. "Disparity in Factor Contributions between Coastal and Inner Provinces in Post-reform China," Working Papers 200502, Ball State University, Department of Economics, revised Apr 2006.
  25. Hu, Baiding & McAleer, Michael, 2005. "Estimation of Chinese agricultural production efficiencies with panel data," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 68(5), pages 474-483.
  26. W, Y, 1995. "Productivity Growth, Technological Progress, and Technical Efficiency Change in China: A Three-Sector Analysis1," Journal of Comparative Economics, Elsevier, vol. 21(2), pages 207-229, October.
  27. Kui-Wai Li & Jun Ma, 2004. "The Economic Intricacies of Banking Reform in China," Chinese Economy, M.E. Sharpe, Inc., vol. 37(4), pages 50-77, July.
  28. K.P. Kalirajan & M.B. Obwona & S. Zhao, 1996. "A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth before and after Reforms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 331-338.
  29. Brümmer, Bernhard & Glauben, Thomas & Lu, Wencong C., 2002. "Policy Reform and Productivity Change in Chinese Agriculture: A Distance Function Approach," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24779, European Association of Agricultural Economists.
  30. Chow, Gregory C., 2006. "New capital estimates for China: Comments," China Economic Review, Elsevier, vol. 17(2), pages 186-192.
  31. Alwyn Young, 2000. "The Razor's Edge: Distortions and Incremental Reform in the People's Republic of China," NBER Working Papers 7828, National Bureau of Economic Research, Inc.
  32. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, vol. 13(4), pages 331-334, December.
  33. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  34. Galor, Oded & Moav, Omer, 2001. "Das Human Kapital," CEPR Discussion Papers 2701, C.E.P.R. Discussion Papers.
  35. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
  36. Claudia Goldin & Lawrence F. Katz, 1999. "The Returns to Skill in the United States across the Twentieth Century," NBER Working Papers 7126, National Bureau of Economic Research, Inc.
  37. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
  38. K. P. Kalirajan & Shiji Zhao, 1997. "Did the technical efficiency of state enterprises improve with the same speed in all provinces in China?," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 269-277.
  39. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
  40. Alwyn Young, 2000. "The Razor'S Edge: Distortions And Incremental Reform In The People'S Republic Of China," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1091-1135, November.
  41. Dong, Xiao-yuan & Putterman, Louis, 1997. "Productivity and Organization in China's Rural Industries: A Stochastic Frontier Analysis," Journal of Comparative Economics, Elsevier, vol. 24(2), pages 181-201, April.
  42. Lin, Shuanglin, 2000. "Resource Allocation and Economic Growth in China," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 515-26, July.
  43. Yiping Huang & K. P. Kalirajan, 1998. "Enterprise reform and technical efficiency of China's state-owned enterprises," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 585-592.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bsu:wpaper:200701. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tung Liu)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.