Study On Efficiency And Productivity Of China's Iron And Steel Industry

Iron and steel which have predominant mechanics performance, physics and chemistry properties, processing characteristics, and price performance ratio, are important raw and processed materials in national economy, social development and national defence construction.They cannot be substituted by other materials in main domains of national economy and national defence.China demands enormous iron and steel materials.In the foreseeable future,China should hold strong iron and steel industry. Iron and steel industry is an important strategic industry in the forward path of industrialization and modernization of China, which cannot be absolutely weakened.China's iron and steel industry (CISI) has made great progress and development since 1949.China is a leading base in iron and steel producing field on the earth and her crude steel output exceeds more than one third of that in the world.But CISI scatters in her territory a lot of small and middle scale enterprises and has lower industry concentration ratio. Its labour productivity and the ratio of energy consumption, pollutants emission and pollutants utilization have obvious gaps with international advanced level. The additive values of Chinese export steel products are lower than those of import ones.China needs to import high-class steel products.The main problem of CISI is that it has only quantitative advantage but no quality predominance synchronously, and has lower international competitiveness.Efficiency and productivity is a primary aspect of competitiveness.This thesis, using improved Solow's Residual Method and Data Envelopment Analysis Method also quasi-DEA based Malmquist Index Method, measures and analyzes on the efficiency and productivity of CISI by collecting and dealing with more than ten thousand data which were gross time series data, panel data of provinces and enterprises, and cross-sectional data of public companies of CISI from Chinese statistical literature. The main obtained results are as below:(1)The author has measured the efficiency and productivity of CISI in the period of 1949 to 2006.The total factor productivity(tfp) growth rate of CISI in the period of 1975-2006 is 3.6 percent measured by improved Solow's Residual Method. It is 4.2 percent and 2.8 percent respectively, measured by Solow's Residual Method in the period of 1975-2006 and 1949-2006. By adding energy consumption variable, it avoids 0.6 percent of overestimation of the tfp growth rate of CISI in 1975-2006. (2) In the period of 1985 to 2000, totally, CISI obtains 3.0 percent of tfp growth rate, 1.3 percent of technical efficiency growth rate, 1.4 percent of pure technical efficiency growth rate and 1.7 percent of technological progress rate. The contribution ratio of technical efficiency growth and technological progress to tfp growth of CISI in this period is 43 percent and 57 percent respectively. Totally, the technical efficiency of CISI is 0.798, there are high gaps between provinces'technical efficiencies.The technical efficiency of eastern coast zone was higher than any other zone markedly, and the most laggard province in technical efficiency produced almost 50 percent yields of that on the production frontier.Some provinces have less than 1 percent decline of scale efficiency.There is only 0.1 percent decline of scale efficiency of CISI totally.The scale efficiency of CISI was almost changeless with its expand of producing scale.(3) The results from analyzing on the 15 Chinese main iron and steel enterprises in the period of 1995 to 2006 show that their average technical efficiency was 0.900, but there was 28 percent highest gap between the best enterprise and the most laggard one. Their average growth rate of tfp, technological progress, technical efficiency, pure technical efficiency and scale efficiency was 5.4, 4.2, 1.1, 0.3 and 0.8 percent respectively.(4) The results from analyzing on the 28 Chinese steel producing public companies in 2005 show that the scale of an enterprise is important to its efficiency. A larger iron and steel integrated complex has greater predominance to a smaller one. The lowest economy scale of a Chinese iron and steel enterprise is about 3 to 5 million tons of annual crude steel output. The number one enterprise with more than 20 million tons of annual crude steel output does not operate in the decreasing returns to scale region of feasible production. Some Chinese steel producing public companies may have serious labour redundancy as compared with one on the frontier.Compared with the previous researches, the innovative points of this paper lie in the following three aspects:First, this thesis measures the efficiency and productivity of CISI systematically at macroscopical, medium-cosmic and microcosmic level and receives abundant helpful revelatory results. The results are confirmed with each other, harmonious in logic, and show a panorama of the efficiency and productivity of CISI. It avoids fragmentary solution to analysis on the efficiency and productivity of CISI, and is unlike that of a previous isolated short-term investigation.Second,based on traditional Solow's Residual Method,the author constructs a proper model improved by adding energy consumption variable to measure gross productivity growth of CISI. The author estimates that there be serial autocorrelation in the stochastic disturbance of the improved model and treats it by AR(1) model. The author's contribution in model improvement and stochastic disturbance treatment enriches the method of measuring gross productivity growth of iron and steel industry.Third, the author makes clear the relationship between CISI's technology progress, enterprise scale, concentration ratio of industry, regional distribution of industry with efficiency and productivity, and receives three new conclusions about technological progress, scale efficiency and technical efficiency via quantitative analysis.First,the author affirms that CISI changes form labour and capital intensive type to capital and technology intensive one in long term and receives its tfp growth mainly by technological progress but not merely by quantity of resource inputs.Second, the author shows that a larger scale enterprise has more scale advantage than a smaller one, and the biggest one has not enter into the DRS region of the feasible production boundary.Third,a province or enterprise with comparative advantages exhibits higher technical efficiency, and the eastern coastal area has higher technical efficiency than any other one.