Agricultural efficiency, technical change and productivity in China

Abstract

Economic reform in China helped transform the structure and volume of agricultural production and resulted in significant changes in efficiency and productivity. This article measures agricultural technical efficiency (TE) and total factor productivity (TFP) in China by including all producers in different groups operating under their own technologies. A metafrontier function approach is applied using a panel data set on 28 provinces during 1991–2005. The provinces are categorised into advanced and low-technology provinces. Based on the metafrontier estimation, TFP growth is decomposed into TE change (TEC), technical change (TC) and scale efficiency change (SEC). Our major findings indicate that TC contributed most to Chinese agricultural TFP growth throughout the period of study. SEC and TEC exhibited negative effects on TFP growth for the advanced and low-technology provinces respectively. Most of the advanced-technology provinces exhibited higher TE than the low-technology provinces. The comparatively low TE scores in the low-technology provinces imply that the low-technology provinces were operating far from the metafrontier. The results also show that labour and fertiliser still make important contributions to output, and thus improving the quality of farmers and applying modern physical inputs is also crucial to TFP growth.