Sectoral productivity growth in China

Abstract: Rapid economic growth in the 1990s in China raised the question of whether the high growth was achieved by augmenting economic scales and increasing investment, through productivity lifting and efficiency improvement, or both. This paper analyses and evaluates total factor productivity growth and technical efficiency in five sectors that encompass the full spectrum of the economy. Assuming a constant rate of technological progress, a random effects panel data model is estimated to quantify total factor productivity growth over the period 1991 to 1997, which covers the prominent eighth five-year period. The panel consists of data from 30 Chinese provinces on output, capital and labour for (i) Agriculture, (ii) Industry, (iii) Construction, (iv) Transportation, Post and Telecommunications, and (v) Services. Strong total factor productivity growth was recorded in Agriculture and Transportation, Post and Telecommunications over the sample period. In the other three sectors, total factor productivity growth slowed down and even declined