Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 25, No. 2, pp.153-175
ISSN: 1225-0279 (Print)
Print publication date 30 May 2012
Received 25 Apr 2011 Revised 20 Nov 2011 Accepted 22 Nov 2011

Total Factor Productivity of Chinese Listed Firms and Catching up with Korean Listed Firms

Xu Jin
Assistant Professor, Division of International Studies, Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul 143-701, Korea, Tel: +82-2-450-0462, Fax: +82-2-450-4044 jinxv0706@gmail.com

JEL Classification: D24, L25, O57

Abstract

In this paper, we measured the total factor productivity ( TFP) of all Chinese publicly listed firms by micro-level, that is, by industry and firm levels, from 1999 to 2005. Financial data from the China Stock Market (CSMAR) database were used and capital (K), labor ( L), and material (M) were employed as input factors. China’s TFP showed some increase but remained relatively stagnant, mainly because of the low TFP of big firms, which could potentially drive the country’s overall productivity. We used four patterns of catch-up method (i.e., overtaking, convergence, slow catch-up, and reverse catch-up) developed by Jung and Lee (2010) to classify the catch-up patterns present in Chinese and Korean manufacturing industries. Two labor input methods, man hour and wage, were adopted for this purpose. The overall TFP catch-up level depended on the different labor input methods. Using man hour as labor input, no catch-up occurred in the overall industry level. Only “slow catch-up” and “reverse catch-up” manifested, indicating a huge gap between the overall industry TFPs of the two countries. Meanwhile, using wage as labor input, all of the four catch-up patterns occurred. The apparel industry particularly showed an “overtaking,” and four industries, namely, electrical machinery, textile mill products, instruments, and petroleum and coal products, showed a “convergence” pattern. The catch-up level of Chinese manufacturing firms approached that of Korean firms when wage was used as labor input.

Keywords:

Productivity, Catch-up, Chinese firms, Korean firms, PPP, ICPA code

References

  • Aw, B., Chen, X., and Roberts, M. “Firm-level Evidence on Productivity Differentials, Turnover, and Exports in Taiwanese manufacturing.” Journal of Development Economics 66 (No. 1 2001): 51-86. [https://doi.org/10.1016/S0304-3878(01)00155-9]
  • Bak, C., Kim, Y., and Kwon, H. “Productivity Growth and Competition across the Asian Financial Crisis: Evidence from Korean Manufacturing Firms.” Center Economic Institutions Working Paper Series No. 2009-12, Hitotsubashi University, 2009 (in Japanese).
  • Brandt, L., Van Biesebroeck, J., and Zhang, Y. Creative Accounting or Creative Destruction? Firm-Level Productivity Growth in Chinese Manufacturing. NBER Working Paper No. w15152, 2009. [https://doi.org/10.3386/w15152]
  • Cao, J., Ho, M., Jorgenson, D., Ren, R., Sun, L., Yue, X., Center, L., and China, B. “Industrial and Aggregate Measures of Productivity Growth in China, 1982-2000.” Review of Income and Wealth 55 (No. s1 2009): 485-513. [https://doi.org/10.1111/j.1475-4991.2009.00328.x]
  • Cheng, Y. Regional Disparities of Industrial Productivity Growth in China. the ACESA2006 Conference on Emerging China: Internal Challenges and Global Implications, Victoria University, Melbourne, 13-14 July, 2006.
  • Cheng, Y.-S., and Lo, D. Firm Size, Technical Efficiency and Productivity Growth in Chinese Industry. School of Oriental and African Studies, Working Paper, London, UK, 2004.
  • Cheong, Y.-R., and Lee, J. K. The Risen of Chinese Economy and the Industry Policy of Korea. Finance Economy Research Vol. 161, Bank of Korea, 2003 ( in Korean).
  • Fu, X., and Floor, T. Exports, Technical Progress, and Productivity Growth in Chinese Manufacturing Industries. ESRC Centre for Business Research, University of Cambridge, 2004. [https://doi.org/10.1057/9780230514836_6]
  • Fu, X., and Gong, Y. “International and Intranational Technological Spillovers and Productivity Growth in China.” Asian Economic Papers 8 (No. 2 2009): 1-23. [https://doi.org/10.1162/asep.2009.8.2.1]
  • Fukao, K., Inui, T., Ito, K., Kim, Y. G., and Yuan, T. An International Comparison of the TFP Levels of Japanese, Korean, Taiwanese, and Chinese Listed Firms. JCER Working Paper, pp. 91-120, 2009.
  • Good, D., Nadiri, M., and Sickles, R. Index Number and Factor Demand Approaches to the Estimation of Productivity. National Bureau of Economic Research, Cambridge, Mass., USA, 1996. [https://doi.org/10.3386/w5790]
  • Gordon, R., and Li, W. “The Change in Productivity of Chinese State Enterprises, 1983-1987.” Journal of Productivity Analysis 6 (No. 1 1995): 5-26. [https://doi.org/10.1007/BF01073492]
  • Holz, C. “China's Statistical System in Transition: Challenges, Data Problems, and Institutional Innovations.” Review of Income and Wealth 50 (No. 3 2004): 381-409. [https://doi.org/10.1111/j.0034-6586.2004.00131.x]
  • Hsieh, C. T., and Klenow, P. J. “Misallocation and Manufacturing TFP in China and India.” Quarterly Journal of Economics 124 (No. 4 2009): 1403-48. [https://doi.org/10.1162/qjec.2009.124.4.1403]
  • Jefferson, G., Rawski, T., and Zheng, Y. “Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments.” Journal of Comparative Economics 23 (No. 2 1996): 146-80. [https://doi.org/10.1006/jcec.1996.0052]
  • Jefferson, G., Rawski, T., and Zheng, Y. “Productivity Growth and Convergence across China's Industrial Economy.” Journal of Chinese Economic & Business Studies 6 (No. 2 2008): 121-40. [https://doi.org/10.1080/14765280802028237]
  • Jung, M., Lee, K., and Fukao, K. “Total Factor Productivity of the Korean Firms and Catching Up with the Japanese Firms.” Seoul Journal of Economics 21 (No. 1 2008): 93-137.
  • Jung, M., and Lee, K. “Sectoral Systems of Innovation and Productivity Catch-up: Determinants of the Productivity Gap between the Korean and Japanese Firms.” Industrial and Corporate Change 19 (No. 4 2010): 1037-69. [https://doi.org/10.1093/icc/dtp054]
  • Kuan, C., Hongchang, W., Yuxin, Z., Jefferson, G., and Rawski, T. “Productivity Change in Chinese Industry: 1953-1985.” Journal of Comparative Economics 12 (No. 4 1988): 570-91. [https://doi.org/10.1016/0147-5967(88)90104-7]
  • Li, Z., and Yu, M. Exports, Productivity, and Credit Constraints: A Firm-Level Empirical Investigation of China. China Center for Economic Research, Peking University, Working Paper Series, August 26, 2009. [https://doi.org/10.2139/ssrn.1461399]
  • Motohashi, K. Assessing Japan's Industrial Competitiveness by International Productivity Level Comparison with China, Korea, Taiwan, and United States. International Conference on Productivity and Efficiency, Academia Sinica Economic Institute, Taipei, June 20, 2005.
  • Ozyurt, S. “Total Factor Productivity Growth in Chinese Industry: 1952-2005.” Oxford Development Studies 37 (No. 1 2009): 1-17. [https://doi.org/10.1080/13600810802660836]
  • Qiu, B., Yang, S., Xin, P., and Kirkulak, B. “FDI Technology Spillover and the Productivity Growth of China's Manufacturing Sector.” Frontiers of Economics in China 4 (No. 2 2009): 209-27. [https://doi.org/10.1007/s11459-009-0012-5]
  • Rae, A., Ma, H., Huang, J., and Rozelle, S. “Livestock in China: Commodity-specific Total Factor Productivity Decomposition Using New Panel Data.” American Journal of Agricultural Economics 88 (No. 3 2006): 680-718. [https://doi.org/10.1111/j.1467-8276.2006.00888.x]
  • Ren, R., and Sun, L. Total Factor Productivity Growth in China Industries 1981-2000. International Comparison of Productivity among Asian Countries, (ICPA) Project, RIETI Database No. 5, Research Institute of Economy, Trade And Industry, Tokyo, Japan, 2006.
  • Schreyer, P. International Comparisons of Levels of Capital Input and Productivity. OECD/Ivie/BBVA Workshop on Productivity Measurement, Madrid, 17-19 October, 2005.
  • Wang, L., and Szirmai, A. “Productivity Growth and Structural Change in Chinese Manufacturing, 1980-2002.” Industrial and Corporate Change 17 (No. 4 2008): 841-74. [https://doi.org/10.1093/icc/dtn020]
  • Wu, H. X. “Measuring Productivity Performance by Industry in China, 1980-2005.” International Productivity Monitor 15 (Fall 2007): 55-74.
  • Yu, M. Trade Liberalization, Firm Exits, and Productivity Evidence from Chinese Plans. China Center for Economic Research, Peking University Working Paper Series No. 6, 2008. [https://doi.org/10.2139/ssrn.1146786]
  • Yuan, T., Fukao, K., and Liu, D. Measurement of the Total Factor Productivity of Chinese Firms. JCER Working Paper, pp. 27-62, 2007 (in Japanese).
  • Zheng, J., and Hu, A. “An Empirical Analysis of Provincial Productivity in China (1979-2001).” Journal of Chinese Economic and Business Studies 4 (No. 3 2006): 221-39. [https://doi.org/10.1080/14765280600991917]
  • Zheng, J., Liu, X., and Bigsten, A. “Efficiency, Technical Progress, and Best Practice in Chinese State Enterprises (1980-1994).” Journal of Comparative Economics 31 (No. 1 2003): 134-52. [https://doi.org/10.1016/S0147-5967(02)00010-0]
  • Zhou, X., and Han, C. Measures Technical Efficiency between China’s Regions and Decomposes the Growth Rate of TFP (1990-2006 ). The Fifth Biennial Conference of Hong Kong Economic Association, Globalization and Economic Stability, Chengdu, China, 2008 (in Chinese).