China's industrial growth and efficiency

Abstract

This paper examines the productive efficiency and growth performance of China's state and TVE industrial sectors during the reform period. The meta-production function approach is applied using enterprise survey data for the 1986-90 period. It is found that the rapid growth of the TVE sector was mainly driven by total factor productivity (TFP) growth and expansion of capital stock. In the state sector, however, the TFP was decreasing during that period. The TVE sector was still technically less efficient in the mid-1980s but it was catching up with and about to reach the efficiency level of the state sector by the end of the1980s. It is also found that industry-wide allocative inefficiency between the two sectors was significant for skilled and unskilled labour but less so for capital. Show more