Evaluating economic efficiency of the national high-tech industrial development districts in the Yangtze River Delta by stochastic frontier analysis

Abstract

The High-tech Industrial Development Districts (HIDDs) are technological engines for the regional economy in China. The Chinese government implemented the Torch Initiative to accelerate industrial agglomeration and innovation development by administratively upgrading the local HIDDs into a national list since 1989. The policy intervention emphasizes the labor and capital inputs on science and technology. The study adopts the Stochastic Frontier Analysis (SFA) to understand the economic efficiency of the enlisted national HIDDs in the Yangtze River Delta. The results suggest that the average efficiency trends of the all-in-total sales, product sales and commodity sales are decreasing while that of technology sales is increasing from 2007 to 2019. In the total sales efficiency evaluation, most early-enrolled HIDDs are in the high-efficiency group whereas the newcomers are in the low-efficiency group. The Nantong HIDD has the highest efficiency, followed by Wuxi, Taizhou, Suzhou, Nanjing, Shanghai ZJ, Xiaoshan, Ningbo, Suzhou IP and Jiangyin HIDDs. Huainan, Huaian, Tongling, Shanghai ZZ, Lianyungang and Suqian HIDDs rank very low in the total sales evaluation. Besides, Hangzhou, Nantong and Ningbo HIDDs rank first in the technology, product and commodity sales efficiency evaluation correspondingly. In addition, the increase of S&T labor inputs would decrease the efficiency of the product, commodity and total sales while the increase of the S&T capital inputs is as expected a facilitator to the efficiency of product, commodity and total sales. This study contributes to the discussion on the role of political intervention in technological innovation by breaking down the economic efficiency into three major parts, the efficiency of technology, product and commodity sales. The findings could help policymakers strike a balance between the human and capital inputs in regional innovation capability.