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The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007

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  • Sai Ding
  • Alessandra Guariglia
  • Richard Harris

Abstract

Using a large firm-level dataset, this paper examines total factor productivity (TFP) and its determinants in China. Our preferred GMM estimation results indicate increasing returns to scale in most industries and a usually large positive trend representing technical change. Various firm characteristics such as age, ownership, political affiliation, export behavior, liquidity, and geographic location are included in the production function. Our results show that in the context of China’s institutional background, including such factors is important when estimating TFP. The average TFP growth in Chinese industries is 9.6 % per annum during the period 1998–2007, and is mainly driven by firm entry. The sub-sector decomposition exercises show that the inter-firm resource reallocations are more prominent across industries than across provinces. Copyright The Author(s) 2016

Suggested Citation

  • Sai Ding & Alessandra Guariglia & Richard Harris, 2016. "The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007," Journal of Productivity Analysis, Springer, vol. 45(2), pages 131-155, April.
    • Handle: RePEc:kap:jproda:v:45:y:2016:i:2:p:131-155
    DOI: 10.1007/s11123-015-0460-0
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    More about this item

    Keywords

    TFP; Productivity decomposition; Entry; Exit; Reallocation of resources; China; D24; O14;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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