| Abstract: | We estimate a frontier production function for Chinese industry for the period 1953–1985. Contrary to prior studies based on OLS estimates, we find that Chinese industry has been characterized by a rate of growth of technological progress between 1.8 and 3.6 percent per year. We also find that the capital-saving nature of technological progress has adversely affected Chinese productivity growth because of increases in the capital-labor ratio. The utilization of industrial resources has been quite suboptimal for much of the sample period, with industrial production well off the production frontier. These deviations from efficient resource use reflect well-known political and economic developments that disrupted economic activity. Finally, both technical efficiency and total factor productivity increased appreciably in the period 1978–1985, suggesting that the reforms have had some positive impact on industrial performance. |
