The Effect Of Reducing Capacity On Total Factor Productivity In The Industrial Sector

With the reform and opening-up in recent decades,China's economy has developed rapidly and now it became the second largest economy in the world.However,which with the unbalanced regional economic development and the industrial industry's production capacity has been excessively surplus at the same time.For this reason,the country put forward a series of productivity policies aim to steadily promote capacity reduction in industrial surplus industries.With the joint role of the government and the market,we will address social issues such as employee placement in surplus industries,which maybe increase the total factor productivity of the industry,and transform economic growth to the track of achieving total factor productivity to achieve new economic growth and realize the new kinetic energy of economic Growth.However,the series of policies implemented to resolve the problem of overcapacity in the industrial sector by our country have not achieved significant results.The total factor productivity of industries such as steel,coal and non-ferrous metals is still at a relatively low level.Therefore,it is necessary to comprehensively and accurately understand the current situation of total factor productivity in different sub-sectors in different regions of the industrial sector.On this basis,the impact of capacity removal on the total factor productivity of the industrial sector is evaluated from the perspective of the implementation of the national capacity-reduction policy,and the capacityreduction policy is objectively evaluated.The implementation of the results will have an important significance for the country in effectively resolving excess industries to remove production capacity,improving the total factor productivity of the industry,and finally completing the “supply-side structural reform”.Domestic and foreign scholars have conducted in-depth research on total factor productivity,and the theory is rich,which has laid the foundation for the study of this article.By sorting out relevant research status and existing deficiencies,the paper takes 35 sub-industries of China's industry as the research object,and quantitatively estimates the impact of implementing the capacity-reduction policy on the total factor productivity of the implementation industry.The empirical research content and corresponding conclusions of the paper mainly include the following two aspects:First of all,based on the semi-parametric LP model,we measure the total factor productivity of industries in 35 sub-industries in China's industry as a whole and in all regions.After reviewing the relevant literature for understanding TFP measures,the semi-parametric LP method was used to measure the industry's total factor productivity in 35 industries in China from 2006 to 2015.As a result,it was found that the average total factor productivity of different industries was 0.8-1.5 as a whole.Among them,coal mining and washing,ferrous metal mining,and non-ferrous metal mining industries had low average TFP.Both are below 1;while the average industry total factor productivity such as general equipment manufacturing,water production and supply is above 1,but it is still low.From a regional point of view,the TFP values of various sub-sectors in the central and eastern regions are generally higher than those in the western region;in the same industries,the TFP in the middle and eastern regions is higher than the TFP value in the western region,which is basically consistent with the industry overall measurement result.Second,the PSM-DID model is used to estimate the impact of the country's implementation of the capacity-reduction policy on TFP in its various industrial subsectors.Prior to conducting the DID empirical analysis,we first analyzed the implementation of the relevant capacity-reduction policies promulgated by the state,determined that the implementation time of the capacity-reduction policy was 2013,and the processing group for the implementation of the policy was 10,namely: coal mining and washing,ferrous metal mining,non-metallic mining,chemical fiber manufacturing,petroleum processing,coking and nuclear fuel processing,electricity,heat production and supply,nonferrous metal mining,transportation equipment manufacturing,textile,clothing,shoes,hat manufacturing,and paper and paper manufacturing.That is treating the above 10 industries as treatment groups during from 2013 to 2015,determining the control group through the PSM from the remaining 25 industries for year-to-year,and then using DID method to estimate the impact on TFP from the capacity removal policy through the processing group in 2013-2015.The results show that by controlling the impact of other variables,the government has implemented a capacity-reduction policy on overcapacity industries,making the overcapacity industry TFP positively promote its industry TFP,increasing the 18.6%.For other control variables,the positive positive effects of industry asset-liability ratio and industry competition on the industry TFP are 17.276 and 8.105,respectively;and the level of industrial labor force and industry main business income have a negative effect on the industry TFP impact.At the end of the thesis,we uses the more comprehensive control method of policy evaluation method to perform robustness test.according to the treatment group,a synthetic control combination is obtained to further calculate the industry TFP difference between the treatment group and the synthetic control combination.The result confirms the capacity elimination policy.There is a promotion effect on the industry TFP,no PSM-DID method to promote it.The possible reason is that the synthesis control method is more accurate in matching,and the current implementation of the capacity removal policy in China is still in the primary stage and needs continuous improvement,and the effect of policy implementation will be a time lag.According to the corresponding research results,the paper proposes the following recommendations.First,develop differentiated capacity-reduction policies in line with local conditions.The national implementation of capacity-relevant policies and measures should be combined with the actual situation of the industry,and the decapacity goals should be decomposed to avoid the emergence of “one size fits all”;second,the combined effect of the government and the market should combine the capacity reduction with the transformation and upgrading of the industrial structure.Through the joint actions of the government and the market,solving the problem of unreasonable resource allocation in the excess industry and the non-standard financing mechanism,the company will complete the transformation and upgrading of the industrial structure while de-capacity;and thirdly,formulate a reasonable industry TFP improvement based on the development of the industries in different regions.mechanism.Through the promotion of regional industry TFP,the industry's overall TFP will eventually be increased,and new economic development momentum will be realized.