Premium
Manufacturing firm heterogeneity and regional economic growth difference in C hina
Author(s) -
Liu Naiquan,
Ye Xinyue,
Yang Huimin,
Li Ying,
Leipnik Mark
Publication year - 2014
Publication title -
regional science policy and practice
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.342
H-Index - 8
ISSN - 1757-7802
DOI - 10.1111/rsp3.12041
Subject(s) - total factor productivity , foreign direct investment , economics , productivity , investment (military) , economic geography , economies of scale , international trade , international economics , monetary economics , macroeconomics , microeconomics , politics , political science , law
The degree of firm heterogeneity is primarily reflected by the differences in the total factor productivity ( TFP ). Heterogeneous firms across regions shape the spatial heterogeneity of TFP . Regional TFP heterogeneity is the underlying cause of regional economic growth differences. Based on data on C hinese manufacturing firms in operation during the period 2001–2007, we employ BHC (Baily‐Hulten‐Campbell) and productivity decomposition methods to analyse the driving forces of regional productivity. As the driving force of domestically‐funded firms’ productivity, the effects of technological progress and economies of scale decline steadily. At the same time, effects of innovation transfer rises steadily. In coastal areas of C hina (Eastern region), the positive impact of foreign direct investment on domestic firms’ TFP is decreasing. However, the positive effect of foreign direct investment is relatively stable in the Central region and Western region. A regional policy approach is therefore proposed based on the empirical analysis of these four effects.