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FINANCIAL DEVELOPMENT, ECONOMIC EFFICIENCY, AND PRODUCTIVITY GROWTH: EVIDENCE FROM CHINA
Author(s) -
GUILLAUMONT JEANNENEY Sylviane,
HUA PING,
LIANG ZHICHENG
Publication year - 2006
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2006.00002.x
Subject(s) - data envelopment analysis , productivity , total factor productivity , malmquist index , china , panel data , economics , index (typography) , technical progress , econometrics , agricultural economics , macroeconomics , geography , statistics , mathematics , archaeology , world wide web , computer science
Financial development might lead to productivity improvement in developing countries. In the present study, based on the Data Envelopment Analysis approach, we use the Malmquist index to measure China's total factor productivity change and its two components (i.e., efficiency change and technical progress). We find that China has recorded an increase in total factor productivity from 1993 to 2001, and that productivity growth was mostly attributed to technical progress, rather than to improvement in efficiency. Moreover, using panel dataset covering 29 Chinese provinces over the period from 1993 to 2001 and applying the Generalized Method of Moment system estimation, we investigate the impact of financial development on productivity growth in China. Empirical results show that, during this period, financial development has significantly contributed to China's productivity growth, mainly through its favorable effect on efficiency.