The sources of total factor productivity growth in Chinese agriculture: technological progress or efficiency gain?

Abstract

Provincial panel data from the agricultural sector and stochastic frontier production function model were employed to study the total factor productivity (TFP) growth since the 1980s in China. We decomposed the TFP growth into technological progress and technical efficiency changes (efficiency gains) as well as the aggregate agricultural TFP growth into crop-specific subsector's TFP growths. We found that Chinese agriculture experienced significant productivity growth in the last few decades, although the growth rates vary considerably among the subsectors. During this period, the source of productivity growth comes from either technological progress or efficiency gains, not from both of them simultaneously. Particularly since the 1990s, Chinese agriculture experienced a great technological progress and yet a considerable efficiency loss. The differences among sources of productivity growth and among subsectors call for distinct policy responses.

Keywords:

• China's agriculture
• total factor productivity
• technological progress
• technical efficiency
• stochastic frontier production function

JEL Classifications::

• Q160
• Q180
• O470

Acknowledgements

The research was financially supported by the National Natural Sciences Foundation of China (No. 70903027), the Research Project for Humanities and Social Sciences of Ministry of Education of China (No. 09YJC790105) and the Specialized Research Fund for the Doctoral Program of Higher Education of China (New Teacher's Fund, No. 20090146120004). These supports are greatly appreciated. We would also thank the anonymous reviewers and the guest editor of the Journal of Chinese Economic and Business Studies for valuable comments and suggestions on the paper. Any remaining errors are solely our responsibility.

Notes

Notes

1. For detailed survey work and data processing for the data sets, please see China agricultural cost and return yearbook and ‘National Product Cost Survey’ website www.npcs.gov.cn/web/index.asp.

2. Mu is a Chinese traditional unit of area, and 1 ha =15 mu.

3. Grain crops include early long-grain non-glutinous rice, middle long-grain non-glutinous rice, late long-grain non-glutinous rice, medium-to-short grain non-glutinous rice, wheat, corn, sorghum and millet. Oil-bearing crops include soybean, peanuts and rapeseed. Tobacco crops include cured tobacco and air-cured tobacco. Sugar crops include sugarcane and beet. Fruit includes apples, mandarin oranges and oranges. And tea mentioned in the paper refers to the average of green primary tea, pan-fired, red primary tea, Oolong lea and compressed tea of different provinces. For a few years, apple data are data of sub-species, which are treated as equals.