Chinese Regional Agricultural Productivity: 1994-2005

Agricultural productivity growth in Chinese provinces during the 1994-2005 period is examined using two alternative approaches: a parametric stochastic frontier and a non-parametric Malmquist index. These models are suitable to the Chinese situation due to the existence of procurement prices, quotas, and other interventions that have distorted prices. Results show that there is high but declining productivity growth rates in the mid 1990’s with productivity growth decreasing in the late 1990’s but with a reversal of the trend around 1998 when growth rates start accelerating. A stochastic frontier translog production function is estimated to obtain an alternative measure of total factor productivity growth. Results are compared across these two models. Although average growth in technical change is similar in the two models, the regional rates are dissimilar. A model that includes three variables hypothesized to explain the difference in performance across regions is also estimated. The three variables included in the model are irrigation ratio, illiterate ratio and agriculture expenditure level. These variables make allowance for the difference of land and labor quality and the effect of public inputs. The irrigation ratio and agriculture expenditure are found to positively relate to the technical efficiency change and the illiterate ratio is found to negatively relate to the technical efficiency change. The results are consistent with expectations.