Total Factor Productivity: An Empirical Analysis Of China’s Iron And Steel Industry (1981-2007)

Iron and Steel Industry, one of the pillar industries in Modern China, has been widely discussed before and after the opening-up. This thesis focuses on the measurement of effectiveness of China’s iron and steel after opening up in 1980. Being one of the key heavy industries in contemporary economy, understanding how effective the upgrading was will help us in better-understanding China’s economy as a whole.The study introducesthe production process of steel making, world steel industry development, China’s steel industry development. It also employs empirical analysis where labor and capital will be used as inputs to calculate the Total Factor Productivity(TFP), which can be used to elicit how efficient the industry was, and how inputs and dummy variable has positively benefited the industry.The result shows China’s Iron and Steel industry is relatively effective, especially after China’s accession into WTO in 2000. However, author suggests further upgrading in capital, labor as well as the continuous efforts in strengthening central government’s policy in the future. This study will serve the purpose of summarization of past experiences, in order to facilitate the deeper development of China’s Iron and Steel Industry.