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Allocation of resources within subgroups of an industry: a case study in the Chinese industrial sector

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  • Chun-kei Tsang

    (Hong Kong Baptist University
    Hong Kong Shue Yan University)

  • Sung-ko Li

    (Hong Kong Baptist University)

Abstract

Facing bottlenecks of economic growth, two important policy concerns of the Chinese government are the regional fragmentation and ownership distortion. This paper extends the method of measuring structural efficiency of a group of firms to the existence of subgroups of firms to evaluate such issue. Without knowing the “true” prices, we argue that there is an output-oriented solution to the economy. We then apply this new method to the Chinese industrial sector from 2005 to 2014 as a case study. We found that resources were allocated efficiently among different regions but not within regions. In contrast, resources were allocated efficiently within different ownerships but not among ownerships. Specifically, by eliminating inefficient resource allocation among different ownerships, outputs of the whole industrial sector could be increased by 21% of the observed levels. These two findings cannot be derived directly from other existing methods. Our results advocate different directions to conduct further regional and ownership reforms in China.

Suggested Citation

  • Chun-kei Tsang & Sung-ko Li, 2020. "Allocation of resources within subgroups of an industry: a case study in the Chinese industrial sector," Journal of Productivity Analysis, Springer, vol. 53(1), pages 125-139, February.
    • Handle: RePEc:kap:jproda:v:53:y:2020:i:1:d:10.1007_s11123-019-00563-8
    DOI: 10.1007/s11123-019-00563-8
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    Cited by:

    1. Mingkai Liu & Changxin Liu & Xiaodong Pei & Shouting Zhang & Xun Ge & Hongyan Zhang & Yang Li, 2021. "Sustainable Risk Assessment of Resource Industry at Provincial Level in China," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    2. Cheng, Louis T.W. & Lee, Shu Kam & Li, Sung Ko & Tsang, Chun Kei, 2023. "Understanding resource deployment efficiency for ESG and financial performance: A DEA approach," Research in International Business and Finance, Elsevier, vol. 65(C).
    3. Cheng Zhang & Ziwei Zhao & Qunwei Wang, 2022. "Effect of Western Development Strategy on carbon productivity and its influencing mechanisms," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 4963-5002, April.

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    More about this item

    Keywords

    Chinese industrial sector; Revenue structural efficiency; Output-oriented structural efficiency; Western development strategy; Ownership reform;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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