Economic openness and technical efficiency: A case study of Chinese manufacturing industries

Abstract

This paper presents a study of the technical efficiency of industries in a transitional economy: China. Using data for 28 manufacturing industries across 29 provinces and the Data Envelopment Analysis approach, the technical efficiency of each industry is measured and compared across regions and provinces. The determinants of differential technical efficiency performance are analysed, with a particular focus on the impact of trade orientation and foreign investment. Trade openness is found generally to have a positive effect on technical efficiency. JEL classification: C6, D2, O4, and O5.

Intangible Investment and Technical Efficiency: The Case of Software-Intensive Manufacturing Firms in Turkey

“…This result is in line with the cases of China (Sun et al, 1999); Hungary (Piesse &Thirtle, 2000), Spain (Gumbau-Albert & Maudos, 2002), and Chile (Tybout, De Melo & Corbo,1991).…”

“…Negative effect is found by (Grether,1999) or no relation is observed by (Alvarez & Crespi,2003). Trade openness of the economy explains regional and industrial variation in terms of efficiency in the case of China (Sun et al, 1999). Economic reforms in China after 1980 targeted coastal regions, therefore, the economy in those regions became much exposed to foreign trade that results in efficiency gains.…”

International Competitiveness of Czech Manufacturing - A Sectoral Approach with Error Correction Model

“…In empirical analyses on sector level Cameron et al (2005) pointed out a statistically viable influence of trade openness on the intensity of technological transfer in 14 British manufacturing sub-sectors. According to Sun et al (1999) who analysed 28 industrial subsectors in 29 Chinese provinces in 1995, trade openness has a positive effect on sectors' technical efficiency growth, which is due to benefiting from effect of the economy of scale and better absorption of technology. In the light of the above the authors posit a hypothesis that the openness of manufacturing sector fosters competitiveness measured by trade balance.…”

Real exchange rate and manufacturing employment in China

“…This export-induced efficiency improvement in the use of labor reduces job opportunities. Using the data for the 28 manufacturing sectors in the 29 provinces, Sun and Doucouliagos (1999) effectively show that the openness of the Chinese provinces towards the outside was a factor of efficiency for industry.…”