Sectoral Productivity Growth in China

Rapid economic growth in the 1990s in China raised the question of whether the high growthwas achieved by augmenting economic scales and increasing investment, through productivity lifting andefficiency improvement, or both. This paper analyses and evaluates total factor productivity growth andtechnical efficiency in five sectors that encompass the full spectrum of the economy. Assuming a constantrate of technological progress, a random effects panel data model is estimated to quantify total factorproductivity growth over the period 1991 to 1997, which covers the prominent eighth five-year period. Thepanel 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. Strongtotal factor productivity growth was recorded in Agriculture and Transportation, Post andTelecommunications over the sample period. In the other three sectors, total factor productivity growthslowed down and even declined.