A Study On The Total Factor Productivity Of China's Industrial Growth

Using DEA-based Malmquist index approach, this paper have examined the total factor productivity growth of China's large and medium-sized industrial enterprises sector during the years 2001-2007 and decomposed the TFP into technical progress, technical efficiency change, pure technical efficiency change and scale efficiency change. Empirical studies indicate that:(1)With the rapid growth of the output, the total factor productivity continuously rised, which has become an important source of industrial growth; (2) The Technological progresses have already become the core motive of TFP growth. The growth rate of the Technology Progress reached as much as 18.7 percentage points a year on average during the years 2001-2007, promoting the annual growth of total factor productivity to 13.3%.We find from these data that the high growth of productivity along with frontier production function curve was mainly promoted by frontier technological progress.(3)The low level of the technical efficiency relative to the Frontier are the great challenge to enhancement of china's TFP.During the two factors of the technical efficiency index, the scale inefficiency is the main reason for technical inefficiency.Therefore, raising the level of scale efficiency of industrial enterprises has become another potential engine for future development of china's economy;(4)On the whole, the growth gap between industry sectors has been converged to some extent.In addition to empirical studies on TFP, this paper used the model presented by Jeffrey Wurgler to estimate the efficiency of capital allocation and the spontaneous level of investment for each industry, and try to find the relevance between the spontaneous level of investment and the TFP growth rates. The result shows that it appears a negative correlation between the two.Finally,this paper put forward some policy recommendations.