Growth, efficiency, and convergence in China's state and collective industry

Abstract

In China, as in the Soviet Union and Eastern Europe, economic reform initiatives seek to increase productivity by introducing elements of market-oriented policies and institutions into an economy formerly dominated by state planning. This study expands the prior framework of analysis in several directions. Our investigation of productivity trends is not limited to state enterprises but includes quantitative comparisons with China's fast-growing collective industries, which contributed 36% of overall industrial output in 1988. Unlike previous studies, our analysis works with gross rather than net output. The analysis confirms our previous finding, based on a restricted framework employing only labor, fixed capital, and net output, that multifactor productivity in state industry has risen substantially during the reform period (1978-88) after stagnating for more than 2 decades. -from Authors