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Sources of production inefficiency and productivity growth in China: A global data envelopment analysis

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  • Wang, Zhaohua
  • Feng, Chao

Abstract

The current mode of production in China is extensive and inefficient and has caused great stress on both resources and the environment. This paper focuses on analyzing the sources of production inefficiency and productivity growth in China. Here, a developed slacks-based measure is utilized to decompose production inefficiency into three components: input inefficiency, economic output inefficiency, and environmental inefficiency. Furthermore, by applying a method based on global data envelopment analysis, we take a further step to analyze the key factors responsible for the change of environmental productivity during 2003–2011 from the point of view of technical progress, productive scale, and management level. The results show that, redundancy in energy and labor inputs, and excessive emission of sulfur dioxide, chemical oxygen demand, and ammonia nitrogen, are the main sources of production inefficiency in China. During the sample period, the efficiency in all inputs and environmental emissions has improved (except for capital input efficiency, which had a decreasing trend). Further analysis shows that the overall environmental productivity in China has begun to follow an ascending path. Technical progress is the most powerful contributor to China's productivity growth, while the decreases in scale and management efficiency are the two main obstacles preventing productivity improvement.

Suggested Citation

  • Wang, Zhaohua & Feng, Chao, 2015. "Sources of production inefficiency and productivity growth in China: A global data envelopment analysis," Energy Economics, Elsevier, vol. 49(C), pages 380-389.
    • Handle: RePEc:eee:eneeco:v:49:y:2015:i:c:p:380-389
    DOI: 10.1016/j.eneco.2015.03.009
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    More about this item

    Keywords

    Global methods; Slacks-based measure (SBM); Environmental productivity; Production inefficiency;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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