Regional disparities and productivity in China: evidence from manufacturing micro data

In this paper we first estimate firm-specific total factor productivities within 2-digit manufacturing industries using a semi-parametric algorithm and micro data for the period 2000–2007. Next, to characterize regional disparities in China we compute aggregate productivity by the categories of three regional typologies, based on population density, coastal-inland, and rural-urban criteria. We analyse the productivity differentials across the categories of the typologies by decomposing regional productivity level and growth into productivity effect and industry composition effect. We find clear evidence of regional convergence. Besides density of economic activity, recent policy and structural factors seem to affect regional productivity level and growth differentials