A new Malmquist-type green total factor productivity measure: An application to China

Abstract

China's GDP has shown a swift rate of increase over the past forty years, and rapid economic development has also brought serious environmental problems. This research is based on green total factor productivity (GTFP) combined with the sound characteristics of the Malmquist and Luenberger indices, and by defining technical efficiency in terms of the orientation-distance function, a new model of the green Malmquist productivity index is recommended. GTFP is extended to the framework of the Malmquist index. We also break down this new Malmquist productivity index (MPI) into the three factors of efficiency changes, pure technology changes, and scale efficiency changes. The empirical application studies 30 Chinese provinces during the period between 2007 and 2017 as the tested sample. The estimated result shows that GTFP in China is on the rise, but the GTFP growth rate is decreasing, mainly due to a slowdown in the rate of technical progress. Furthermore, the empirical study also finds a significant difference among the eastern, central, and western regions of China.