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Resource allocation and productivity across provinces in China

Author

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

Abstract

The rapid economic development in China has been characterized by levels of income and productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative e ciency across provinces in China over the period 1998-2007. Using firm-level data from the surveys conducted by the National Bureau of Statistics on the Chinese manufacturing firms, we measure the degree of resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that within-industry allocative e ciency varies considerably across local areas and that some place-based factors strongly influence resources mobility. Our work sheds some light on the mechanisms at play in the distribution of resources in China and it contributes to the literature investigating the degree of allocative effciency.

Suggested Citation

  • Peng Bin & Xiaolan Chen & Andrea Fracasso & Chiara Tomasi, 2017. "Resource allocation and productivity across provinces in China," DEM Working Papers 2017/02, Department of Economics and Management.
    • Handle: RePEc:trn:utwprg:2017/02
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    Cited by:

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    2. 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.
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    More about this item

    Keywords

    Allocative effciency; 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
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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