Resource Misallocation, Structural Changes And Productivity

Since the reform and opening up,China's economy has achieved sustained growth.The rapid development depends on extensive growth model of massive resource input,which has kept the economy growing at a higher rate,but also created a misallocation in resources.The misallocation of resources leads to structural contradictions,which in turn affects economic efficiency.As China's economy enters the stage of high quality development oriented by efficiency,the impact of resource misallocation is more obvious.How to change or correct resource misallocationes,improve the efficiency of resource utilization,realize the high quality development of economy and improve the overall efficiency of economy,become an important issue of the current.In this paper,we study the misallocation of resources in China from both theoretical and empirical aspects,analyze its characteristics,influencing factors and causes,and propose possible paths and directions for resource misallocation governance.Based on the resource misallocation between China's three industries,this paper analyzes the characteristics,degree and influence of resource misallocation from the perspective of inter-industry relations,and analyzes the specific characteristics,forms and causes of resource misallocation from the perspective of sub-industry and factor structure.This framework reflects both the study path in micro,medium and macro levels,and the mechanism of element,structure and growth,which fits the theoretical research framework of the resource misallocation,structural changes and productivity.The inter-industry investigation shows that the misallocation between China's three industrial resources is serious and fails to be corrected,which causes losses to total output and TFP.The main effect is the misallocation of capital elements which has not been corrected.The research of the sub-industry perspective shows that the resources are not only misallocated in the industries,but also among the sub-industries.The reason for the long and severe distortion of capital element allocation is that it is deeply influenced by industrial policy.The analysis from the perspective of factor structure shows that the long-term deviation between production factor allocation structure and productivity further proves the long-term and authenticity of Chinese resource misallocation.This paper reveals that the core crux of China's resource misallocation lies in the serious deviation between factor allocation of inter-industry and inter-sub-industry and productivity.We have eight chapters in this article,which in turn introduces the background analysis,theoretical mechanism,empirical research and policy recommendations.The background analysis is mainly the introduction of the first chapter,and the topic selection and preliminary research methods are determined through the background analysis.Theoretical mechanism part includes chapter 2 and 3,the second chapter is literature review,by classifying related research results,provides a theoretical basis for subsequent research;The third chapter is the theoretical mechanism analysis of the productivity affected by resource misallocation and structural change,which sets up a theoretical framework for the full research.This paper first construct a multi-sectoral growth accounting framework which contains resource misallocation and efficiency loss,then uses the framework for empirical analysis of China's resource misallocation.The empirical research part includes chapter 4,chapter 5,chapter 6 and chapter 7.The fourth chapter evaluates the industry resource misallocation.The fifth chapter is the influence of productivity caused by the inter-industry resource misallocation.Chapter 6 evaluates the detailed industry resource misallocation and its impact on productivity.Chapter 7 is the effect of the change of element configuration structure on productivity.The policy recommendations are mainly chapter 8,research conclusions,implications and recommendations.The main research methods and conclusions are as follows:The first chapter is the introduction.Firstly,the research background and the significance of the research on the problem of resource misallocation are introduced,which leads to the selection of the thesis.Next,it introduces the research ideas and framework of this paper,and establishes the research path and logical context.After that,the research content and methods of the article are further established.Finally,it introduces the possible innovation points and the direction of further improvement.The second chapter is literature review.With a review of the existing literature,combed the concept,origin and causes of resource misallocation.It not only analyzes the measure method of resource misallocation,reviews and classifies the theoretical sources of resource misallocation,resource allocation and industrial structure change,but also summarizes the empirical research results of resource misallocation and resource allocation.Finally,it puts forward that which part of the existing research can be improved and studied in depth.Chapter 3 is the theoretical mechanism of resource misallocation and structural change affecting productivity.Around this topic,divide productivity into single factor productivity and total factor productivity,and analyze their meanings,main calculation methods and applicable conditions respectively,which provide a methodology basis for the subsequent measurement of the productivity.Based on the above theory,method and the analysis of transmission mechanism and theoretical model of resource misallocation and structure changes affecting the productivity,in the end,this paper elaborates the theoretical mechanism and framework and hypothesis of empirical research,which is the key problem of Chinese resource misallocation research.The fourth chapter is the evaluation measure of inter-industry misallocation resources.Through the observation of the resource misallocation and structure imbalance of three industries,the analysis of related problems is introduced.By combining with the traditional Syrquin's(1986)growth accounting framework,and drawing lessons from Hsieh and Klenow's(2009)hypothesis,it tries to construct the growth accounting model of resource misallocation,structural changes and efficiency loss,and then uses the model to analyze and measure the situation,degree and trend of the resource misallocation of three industries.The empirical results show that there is a serious resource misallocation between the three industries in China,and the degree of resource misallocation is gradually deepening.For the first and third industries,capital and labor factors are too much,which are too little for the second industry.Chapter 5 is the effect of inter-industry resource misallocation on productivity.On the basis of the accounting framework established in chapter four,the fifth chapter further establishes the output change decomposition model to reveal the relationship between the change structure of economic output,the misallocation of resources and productivity.The effects of correcting three industrial resource misallocation(i.e.resource reconfiguration)on the overall economic output and TFP changes were measured.At the same time,the relationship between labor productivity and industrial structure in China is analyzed by means of production function intensive model.The results show that China's economic growth mainly depends on the input of factors(the average contribution accounts for 89%),and the contribution of TFP is small(an average of just 11%).The contribution of capital elements to investment growth is far greater than labor factors,and the former is more than seven times of the latter.The Chinese economy overall TFP mainly comes from the ascension of three industrial TFP contribution,but the total effect of resetting distorted elements is negative,which means that industry resource misallocation has not been corrected effectively over the years.This problem resulted in loss of total output and TFP(of which the second industry contributed as much as-1.27%to total TFP and total output).The improvement of the overall labor productivity is mainly rely on the improvement of sub-industry labor productivity.The adjustment of industrial structure and resource reconfiguration caused by the correction of the misallocation of labor resources are effective in improving labor productivity,but its contribution is small(about 20%).The labor productivity of the second industry is the highest and its growth rate is the fastest,and the labor productivity gap between the second industry with other industries is widening.It also shows that China's service oriented industrial policy,which has been implemented for many years,may not meet the current development facts and the goal of increasing the overall productivity of the economy,but may lead to resource misallocation.Chapter 6 is about the measure of industry's resource misallocation and its impact on productivity.To reveal the actual circumstances and the cause of three industry internal structure change and misallocation,this chapter has done a thorough research into three industries by measuring and analyzing 20 sub-industries,and then further analyze the overall productivity of the economy from the sub-industry perspective.In chapter 6,the data problem is solved,and the capital stock of 20 sub-industries is estimated.The model is used to measure the misallocation index of 20 sub-industries.We found that the effects of each industry on the Lewis turning point were different:Some sub-industries have obvious effects,and the degree of distortion is obviously alleviated.Some sub-industries have no effect.The allocation of capital elements has been severely distorted for a long time,which is deeply influenced by industrial policy:China's capital elements are too heavily invested in the property sector,the transportation industry(i.e.the iron base)and the monopolistic industries like water,electricity and heat,and it is a long-term process and state.In both manufacturing and service industries,there is a shortage of capital elements in sub-industries.There are not only resources misallocated between the second and third industries,but also structural misallocation inside the second and third industries.Both capital and production elements are over allocated in postal and telecommunications,which are insufficient in financial insurance industry and machinery equipment manufacturing.For both the financial insurance industry of modern service industry and the machinery and equipment manufacturing industry of advanced manufacturing industry,we need to continuously increase capital and manpower support.Chapter 7 is the impact of structural changes on productivity,which studies on the relationship between structural changes of elements and productivity.First of all,using data envelopment analysis(DEA)method and the SR method respectively to calculate and analyze total factor productivity.Through the decomposition and calculation of TFP,it shows that the total factor productivity in China is mainly rely on external technological progress,and technical efficiency of the economic continues to deteriorate.Then,measuring method is used to do stationarity test and model setting test on output share,capital share and labor share.The coefficient model of fixed effect variable is used to analyze the three groups of relationships.In the three groups of relationships examined,the conclusion that only the co-integration relationship between the output share and the productivity exists is verified.The long-term stable equilibrium relationship between output structure and productivity growth is confirmed by the unit root test of residual sequence.There is no such relationship between factor structure and productivity.Although the structure change of production factor has a certain effect on the productivity of different industries in the short term,but the investment structure and productivity change of capital factor and labor factor do not exist between inner equilibrium relationship for a long time.It verifies the long-term and authenticity of Chinese resources misallocation,and shows that the deviation between production factor configuration and productivity is not temporary,but long-term.The eighth chapter is the conclusion,revelation and suggestion.In this chapter,the empirical results are summarized and the conclusions are explained and analyzed theoretically.The crux of China's resource misallocate lies in the serious deviation between factor allocation of inter-industry and inter-sub-industry and productivity.In order to correct the misallocating of resources in China,the paper puts forward a governance path which is oriented by market-oriented allocation of resources,aiming at improving total factor productivity,optimizing capital element allocation and adjusting industrial structure policy.It also puts forward some policy Suggestions,such as insisting on market allocation resources,maintaining the stability and continuity of economic and industrial policies,adopting more flexible and targeted industrial policies,improving the efficiency of capital element allocation to focus on improving the total factor productivity.