Research On The Mechanism Of Resource Misallocation To China's Total Factor Productivity

Since the reform and opening up,China has gradually established a resource allocation method based on market mechanism,which has achieved rapid growth for the Chinese economy for nearly 40 years.However,the result of �Chinese catch-up�has also accumulated deep economic problems of 40 years.It is getting more and more exposed.We have found the following basic facts about the Chinese issues:(1)China's current factor market reform is still not perfect.Since the government controls the pricing and distribution rights of key elements such as capital and labor,in the process of China's economic transformation,the allocation of various factor resources among enterprises is often constrained and influenced by the nature of ownership.Although the transformation of the product market from the plan to the market is basically completed,the reform of the factor market is still lagging behind.(2)At present,China needs to improve the total factor productivity.China's total factor productivity is relatively low,and there is a certain gap compared with developed countries.Therefore,the biggest challenge for China's economy in the future is to further increase total factor productivity.The contribution rate of total factor productivity to China's economic growth is declining,especially since the global financial crisis.(3)China's current entrepreneurs still face institutional constraints.Entrepreneur as the main body of economic activity is an important production factor for economic growth.In the specific environment of China's factor misallocation,especially private entrepreneurs still face the �ownership preference� of financial resources,which leads to the crowding out effect of the private sector.Based on these factual observations,we try to understand how the distortion of the above-mentioned factors of production,that is,the misallocation of resources,affects the important issue of China's total factor productivity.And in the context ofthe current Chinese system,we have considered the relationship between the government and the market.Our ultimate goal is to estimate China's total factor productivity loss and reveal its micro-forming mechanism,seeking ways to improve China's total factor productivity and make policy recommendations.We have studied a large amount of literature on factor distortions and resource misallocationes.Our research draws on the pioneering work of Hsieh & Klenow(2009).Hsieh & Klenow's contribution is to examine the misallocation of resources between firms.Understanding the growth of total factor productivity provides a new possible direction.Our main research work is to theoretically analyze the three processes of resource misallocationing the impact mechanism of China's total factor productivity,namely the formation mechanism of resource misallocation,the mechanism of resource misallocation affecting the total factor productivity of enterprises and the total factor of enterprise level.The aggregate mechanism of productivity to macro level and the central analysis of our theoretical analysis and empirical analysis.At the same time,we further subdivide the resource misallocation,and integrate entrepreneurs into the research field of resource misallocation,which expands the connotation of the concept of resource misallocation.At the same time,we further subdivide the resource misallocation and conduct empirical research on the resource misallocation of the three single elements.The main innovation of this paper is to integrate entrepreneurship into the research field of resource misallocation and expand The connotation of the concept of resource misallocation and enriched the existing literature on the field of resource misallocation.Our main conclusions are as follows:First,when examining the relationship between capital misallocation and corporate characteristics,the resource misallocation in the western region continued to improve by region,but the improvement range was the smallest among the three regions,basically maintaining between 0.72 and 0.50.The average annual growth rate is lower than that of other regions.The improvement in the eastern region is the most obvious,from 0.91 to 0.4,indicating that the distortion limit is shrinking,but there is still room for further productivity improvement.In terms of scale distribution,the25-percentile-scale enterprises gradually eliminated after the distortion in 2003,so the potential growth rate gradually declined after 2003.When examining the relationship between capital misallocation and the dynamic distribution of productivity,we find that as the year increases,a clear trend is that the distribution on the left side of the distribution shows a gradual thinning and shrinking trend,indicating that the distribution on the left side of the distribution is low in the past few years.Productivity companies are gradually withdrawing from market activity.Another possible way is to improve productivity levels and increase productivity levels above industry averages.The three discrete distributions have different degrees of rebound,indicating that the productivity level among enterprises has an expanding trend during this period,indicating that the dispersion of productivity distribution between enterprises increases due to the tendency of distortion.Secondly,we get the wrong pairing of labor factors and the impact of total factor productivity at the provincial level.Specifically,the average degree of distortion in1985-1997,1997-2007,2007-16 and the whole period,effective and practical The growth rate of factor productivity.From 1985 to 1997,the actual annual total factor productivity growth rate was 0.48 percentage points higher than the effective total factor productivity growth rate.That is,the improvement in factor allocation during the first sub-period contributed about 0.459 percentage points to the annual growth rate of TFP.And the average annual growth rate of actual total factor productivity is0.536% lower than the effective total factor productivity in the long run.At the same time,we can also find that the impact of the whole degree of distortion on the difference between the actual and effective TFP growth rate is getting smaller and smaller,indicating that as the resource misallocation improves,not only the degree of distortion has been reduced,but also the effect of the average effective productivity.The impact is also gradually reduced,which is-0.74,-0.59,-0.41.Third,further analysis of the misallocation of entrepreneurial talents shows that the distortion of the institutional level exacerbates the degree of capital misallocation,and thus the financing constraints lead to changes in entrepreneurs' career choicedecisions,which in turn affects the output of enterprises.The basic conclusion is that the change in total factor productivity comes from the exit of inefficient enterprises in the state-owned enterprise sector.The direct impact of the reform is the expansion of the private sector,and the continued increase in the income share of the private sector has led to an increase in the demand for labor,which has led to the withdrawal of inefficient state-owned managers.Since the institutional reform is considered in the model,our conclusions may be instructive for understanding the economic transformation process and China's economic growth during the 40 years of China's reform and opening up.Through counterfactual analysis and simulation,we can get the TFP compared with the real value.We can get the improvement of TFP brought by institutional reform(reform and opening).We found that after the reform in 1992,the TFP continued to evolve more than the pre-reform trend.23%,indicating that institutional reform may be an important reason for the change in China's TFP during this period.In summary,this paper starts from the production function of heterogeneous enterprise theory,from the theoretical and empirical two dimensions,using the Chinese industrial enterprise data and provincial industry panel data to empirically test the theoretical model.The common feature of the model is that through the counterfactual analysis method,that is,by comparing the reality of the misallocation with the hypothesis that there is no misallocation,the misallocation leads to the change of total factor productivity.Finally,we incorporate capital,labor,and entrepreneurship into a unified econometric regression model.We find that capital misallocation and labor misallocation have a greater impact on TFP at the macro level(region,industry,ownership,etc.)than at the enterprise level.And the role of entrepreneurs in misallocationing TFP at the enterprise level is affected by financing constraints.