Focused Research Area

Productivity Analysis of the Chinese Economy

Coordinator

Dr. Hing-Lin Chan, Department of Economics, School of Business
(E-mail: hlchan@hkbu.edu.hk)

Objectives

To many developing countries, China presents one of the most interesting cases for studies. Although the country was able to make significant economic progresses in many important sectors, the process of transformation is by no means a smooth one. In particular, the country has still needed to tackle a number of difficult problems. Against this background, it is therefore interesting to study the experience of China in reforming its economy.

In order to evaluate this experience, we have chosen to study the productivity change in China. In particular, we are interested in examining a number of interesting questions pertinent to the reform. First, has China been able to make significant improvement in its productivity performance? Second, in what sectors the productivity performance has been most successful? Third, what are the determining factors behind the change of productivity? In our opinion, these studies will allow us to know more about the causes of economic progress in China.

Activities Held

Professor C.A. Knox Lovell from the University of New South Wales visited the School during May 10-14, 1999, and conducted two seminars on "A growth maximizing tax structure for New Zealand" and "Yet another Malquist Productivity Index Decomposition".

Dr. Yanrui Wu, Lecturer at Department of Economics in University of Western Australia, visited the School in June 1999, and conducted two seminars on "Accounting for China's Growth: the Role of Productivity" and "Regional Integration, Productivity and Growth: Evidence from the Economies of Taiwan, Hong Kong, Guangdong and Fujian".

Dr. George Battese, Associate Professor at Department of Econometrics in University of New England, visited the School during 9-14 September 1999, and conducted a seminar on "Stochastic Production Frontier Analysis".

Professor Subal C. Kumbhakar, Department of Economics, University of Texas at Austin, conducted two seminars on "Incorporating exogenous influences of efficiency" and "Estimation of firm specific technological bias, technical change and total factor productivity growth: A dual approach" in December, 1999.

Seminar Title :	Marginal cost and price over the business cycle: comparative evidence from Japan and the United States
Speaker :	Professor Bob Hart, Department of Economics, University of Stirling, United Kingdom.
Time :	2:30 p.m.- 4:00 p.m.; 3rd April, 2000 (Monday).
Abstract :	We estimate marginal cost over the cycle for Japan and the U.S., concentrating on the intensive margin of the firm's activity. Estimation is undertaken for sixteen 2-digit industries over a 30-year period to the early 1990s. Costs movements consist of changes in the nominal wage, movements along the marginal wage schedule, and changes in total hours per unit of output. Marginal cost implications of variations in the proportion of overtime/total hours and in marginal overtime premiums are accommodated. We also provide estimates of the cyclical behaviour of price-cost mark-ups. Marginal cost is found to be counter-cyclical in both countries although stronger in the U.S [Nb Labour hoading and productivity feature very strongly in this paper.]

Seminar Title :	Pro-cyclical Labour Productivity: a closer look at a stylised fact Speaker : Professor Bob Hart, Department of Economics, University of Stirling, United Kingdom.
Speaker :	Professor Bob Hart, Department of Economics, University of Stirling, United Kingdom.
Time :	2:30 p.m.- 4:00 p.m. 5th April, 2000 (Wednesday).
Abstract :	At 4-digit U.S. manufacturing industry level, we find evidence suggesting that the stylised fact of pro-cyclical labour productivity should be treated with great caution. We use the NBER Manufacturing Productivity database to investigate the relationship between labour productivity and real output for four hundred and fifty industries for the years 1958 to 1991. Labour productivity is significantly pro-cyclical in 63 per cent of industries and acyclical in 36 per cent. In the latter respect, a high proportion of investment goods industries display acyclical productivity. Cross-section regressions are carried out that seek to explain the inter-industry distribution of cyclicality. The analysis attributes an important role to variations in materials costs, as a proxy for fluctuation in factor utilisation.