An Empirical Analysis of Provincial Productivity in China (1979–2001)

Abstract

This study analyzes provincial productivity growth in China for the period of 1979-2001. The Malmquist Index approach allows us to decompose productivity growth into two components, technical progress and efficiency change. Considerable productivity growth was found for most of the data period, but it was accomplished mainly through technical progress rather than efficiency improvement. Although China's capital stock has been accumulated at the speed of a historical record in recent years, our findings show that TFP growth slowed significantly during 1995-2001. The study thus raises serious questions on whether China's recent growth pattern is consistent with its comparative advantages, and whether its reliance on capital accumulation can be sustained in the long run.Journal of Economic Literature Classification Numbers: O47, O53, D24

Can China’s Growth be Sustained? A Productivity Perspective

“…Introducing new technologies there without first realizing the full potential of existing ones might be wasteful (Felipe, 1999). Several studies have found that TFP growth in China has been achieved more through technical progress than efficiency improvement (Zheng, Liu, and Bigsten 2003;Zheng and Hu, 2006). Since efficiency remains low, there are still large unexplored possibilities for efficiency-improvement in China.…”

“…Zheng and Hu (2006) (Economist, 2005). This was due to a decline in the growth rate of total factor productivity from 1993.…”

“…However, since then growth in capital inputs has exceeded GDP growth, often substantially. Some recent studies have reported a prolonged slowdown in total factor productivity growth (Zheng and Hu, 2006;OECD 2005). This situation might have been due to the fact that China's productivity growth before the mid-1990s was driven mainly through one-time dramatic improvements in policies.…”

The Inequality of the Provinces in China: A Productivity Analysis

“…According to [3], the depreciation rate of 4 percent should be used in the calculation of capital stock. The output used is real gross regional product (GRP) (1995=100) and all the inputs and output vectors are value at RMB million.…”

China: A New Model for Growth and Development

“…For example, one analysis (Hu et al 2008) uses DDF to rerank the technical change and efficiency of Chinese provinces once energy and emissions are taken into account, and shows different rankings compared to the more traditional measures (e.g. Zheng and Hu 2005). A 2010 study (Wang et al) estimates Chinese regional-level TFP and finds that changes in GTFP and TFP deviate from each other, with GTFP suffering mainly from the over-emission 3 See Wu (1995; Woo (1998) of sulphur dioxide and chemical oxygen demand.…”