| This thesis consists of three chapters providing an integrated analysis of the relationship between TFP components, institutions, and R&D performance in Chinese manufacturing industry.; Relaxing two of the classic assumptions of growth accounting theory, Chapter One derives an expression for the comparative static effect of a change in productivity (TFP) on firm's profitability. The model is estimated using a panel data set of Chinese state-owned manufacturing enterprises. The result confirms the hypothesis of a positive link between TFP and profitability. Also there is evidence indicating that the SOE managers are profit-maximizers. Stability and robustness checks provide the consistent evidence supporting these findings.; Relaxing one of the classic assumptions of growth accounting theory, Chapter Two decomposes the TFP into the scale effect, technical efficiency and technical change, and then builds a three-equation empirical model for the comparative static analysis of a firm's profitability, TFP components and institutions. The model is applied to a panel data set of Chinese state-owned manufacturing enterprises. Technical efficiency appears to have the greatest impact on profitability. It is found that different institutional factors, including education, incentive structure, market concentration, and administration managerial control, matter for different components of TFP. A policy implication is that providing institutional reform may be a better policy alternative than directly investing physical inputs in Chinese state-owned manufacturing enterprises.; Chapter Three, which investigates a set of fundamental relationships in the R&D literature, is based on an unusually rich set of panel data covering the population of China's large and medium-size manufacturing enterprises. A recursive three-equation system is used to investigate the determinants of firm-level R&D intensity, the process of knowledge production, and the impact of innovation on firm performance. Several results stand out. Overall, the statistical relationships within the model are surprisingly robust, including the contributions of R&D expenditure to new product innovation, productivity, and profitability. The roles of firm size, market concentration, and profitability in driving R&D effort parallel those found in the U.S. literature. It is found that new product innovation accounts for approximately 12 percent of the total returns to R&D. Also, returns to industrial R&D in China appear to be at least three to four times the returns to fixed production assets. |
