Impact Of Capital Distortions On Resource Allocation Cross The Enterprises In The Manufacturing Sector

This article based on the imbalance background of financial sector and manufacturing marketization, and researching the capital distortions in the manufacturing due to the lagging development of financial system in China, and analysis of capital distortions influence on resource-reallocation efficiency in manufacturing sector. We found that the manufacturing sector has more serious capital distortions, which led to the difference in productivity between enterprises in the manufacturing sector, and economic resources strayed from the productivity distribution. Consequently, capital distortions hindered economic resources from low productive enterprise to high productive enterprise, and curbed the growth of high productive enterprises, and also prevented the scale of low productive firms shrink and exit. Further, we discussed the differential impact of capital distortions on resource-reallocation efficiency between different ownership enterprises. The result is that capital distortions have different influence on resource-reallocation efficiency between different ownership enterprises. Finally, we analyzed the differential impact of capital distortions on resource-reallocation efficiency between Yangtze River Delta and the Pearl River Delta. And we found that capital distortions prevented the growth of low-productivity firms in Yangtze River Delta, while promoted the expansion of low-productivity enterprises in Pearl River Delta. Thus, it led to the difference in total factor productivity between Yangtze River Delta and Pearl River Delta.