Productivity gap and Factor misallocation in Chinese manufacturing sector – micro perspective

Gottwald-Belinic, Martina (2021): Productivity gap and Factor misallocation in Chinese manufacturing sector – micro perspective.

Abstract

This paper explores the heterogeneity of resource efficiency and investigate the associations of productivity and efficiency in relationship to ownership, region and access to capital within the Chinese manufacturing sector. We use the Hicks- Moorsteen Index to decompose within a firm efficiency conditional on ownership, sectors, and provinces for the period from 1998 until 2007. The results show a high heterogeneity of labor and capital resource efficiency among the firms. The pace of economic growth required capital investment in the sector. The consolidated results show higher misallocation of capital for State Owned Enterprises (SOEs) compared to private firms. The factor accumulation within SOEs contributed to a higher deterioration of resources. Our findings indicate necessity for growth in efficiency and support policy development for improved resource reallocation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Total Factor Productivity (TFP), China’s new development stage, Industrial Upgrading in China, Output and TFP Growth Potential
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; L - Industrial Organization > L5 - Regulation and Industrial Policy > L53 - Enterprise Policy; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East

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