The Influence Of Misallocation On Manufacturing Total Factor Productivity In China

How to achieve effective resources allocation has always been a topic of microeconomics research. With a large number of micro-enterprise data widely used in the economic research, people began to run an effective mechanism for the allocation of resources more in-depth discussion. However, among the many mechanisms, academia are mostly concerned about the misallocation on total factor productivity and finance, and the study of misallocation in industrial structure was significantly less.This paper mainly analyzes the influence of misallocation in industrial structure on regional manufacturing productivity in China. Firstly, we use the model of Jones' s based on intermediate products' s input- output analysis to explain that misallocation has a multiplier effect because of the input- output relationship between enterprises. Further, we introduce the important variables "intermediate inputs" and expand Aoki's equilibrium model framework across sectors appropriately to explore the misallocation on regional economic growth and the sources of them. In empirical part, we choose China's industrial enterprises in 2007 and China's national economic input-output table in 2007 as sample to test our hypotheses. The main conclusions are as follows:(1) The contribution of "intermediate inputs" on productivity is much higher than capital and labor. So it's improper to ignore the "intermediate inputs" in the production function on most of the previous studies. We find that the contribution of "intermediate inputs" on productivity is more than 70%, this indicates it exists a high degree of dependence on the intermediate product of China's manufacturing.(2) The difference between allocative efficiency is an important reason for regional gap in the eastern, central and western. The allocation of resources in the east is the most effective, while the situation of central has not much more advantage than the west.(3) Food manufacturing, petroleum industry, transportation equipment manufacturing and communications equipment manufacturing has the most great impact on economic growth, and they are the main sources of the misallocation. Especially, the productivity of transportation equipment manufacturing and communications equipment manufacturing is significantly lower than other industries, and the misallocation of production factors in them has a significant negative impact on productivity. According to the conclusions of this paper, we proposed new ideas and new programs for improving the allocation of resources in regions.