Stochastic Frontier Analysis On The Cost Efficiency Of Industrial Enterprises In Guangdong Province

Since the reform and opening up, China’s economic growth has made achievementsattracting worldwide attention, in1977-2011, the average growth rate per annum of China’sGDP at constant prices was up to11.24%.However, there is a lot of controversy on the qualityof China’s economic growth,Chinese and foreign scholars have made a number of studies onthe productivity and efficiency of China’s economy, most of the studies are national-level,and use macro aggregate data. This can not reflect the growth characteristics of the differentregions in China, also can not show the micro-economic foundation. As one of the mostimportant economic province, Guangdong Province has made outstanding contribution toChina’s economic growth,the characteristics of its economic growth is certainly worthy ofstudy,but at present,there is few research on the quality and efficiency of the GuangdongProvince’s economic growth.Technical efficiency reflects the ability of a enterprise to utilize the existing technology,stochastic frontier production model is widely used in various fields and industries to estimatetechnical efficiency. Cost efficiency reflects the ability of a enterprise to save cost when itproduces goods, which can be decomposed into technical efficiency and allocative efficiency,the cost frontier reflects some useful information on a enterprise’s returns to scale andtechnological progress.Based on the micro-data from4454above-scale industrial enterprises in GuangdongProvince during2007-2011and translog function,this article establishes stochastic frontiercost model to estimate their cost efficiency. The results show that the general cost efficiencyof industrial enterprises in Guangdong Province is not high, the average cost efficiency of allenterprises in the five years is between0.55-0.66,decreasing year by year. From2007to2011,the decline of average cost efficiency of all enterprises is0.11; The speed of decline onefficieny of industries which have low cost efficieny is high，while the speed of decline onefficieny of industries which have high cost efficieny is low.During2007-2011, when industrial enterprises in Guangdong Province producegoods,there is significant technical progress. Technology-intensive industries face sepicalmarket environment,which becomes industrial enterprises’ market pressures forcing them to carry out technological innovation and upgrade products, with a high speed of technologicalprogress; labor-intensive industries face much smaller market pressures forcing them to carryout technological innovation and upgrade products, with a low speed of technologicalprogress. Guangdong Province has developed industrial economy, most of the non-monopolyindustries have low access threshold,and sufficient competition exists in these industries,which is external pressure forcing industrial enterprises to carry out technological innovation.In general,the average returns to scale elasticity of industrial enterprises in GuangdongProvince is1.075, reflecting increasing eturns to scale,which rose from1.053in2007to1.090in2011. There are23industries having increasing returns to scale,while13industries havingdecreasing returns to scale, which has something to do with good economic system，highopenness and market environment in Guangdong Province,.