Chinese industrial productivity: Trends, measurement issues, and recent developments

Abstract

This paper extends measures of total factor productivity (TFP) for China's state and collective industry to cover the period 1980-1992, analyzes issues raised by critics of previous studies, and evaluates the robustness of productivity results. TFP increased in both major segments of Chinese industry throughout 1980-1992. The analysis of measurement issues confirms earlier results showing moderate TFP growth for state industry. Data bias may undercut the common observation of differential TFP growth favoring collective industry. TFP growth declines after 1988, especially in the state sector, where partial productivity of fixed capital drops. Differential rates of capacity utilization and, in state industry, selection bias and an unresponsive system of investment finance may have retarded the measured growth of productivity during 1988-1992. J. Comp. Econom., October 1996, 23(2), pp. 146-180. Brandeis University, Waltham, Massachusetts 02254; University of Pittsburgh, Pittsburgh, Pennsylvania 15260; and Institute of Quantitative and Technical Economics, Chinese Academy of Social Sciences, Beijing, China 100732. © 1996 Academic Press, Inc.