Abstract
This paper analyses the technical efficiency and total factor productivity (TFP) growth of China’s electronics industries from 2006 to 2010 using stochastic production frontier model. The estimates show that the mean technical efficiency scores of electronics firms in Hong Kong and Mainland China are 63% and 90%, respectively. The estimation using the technical inefficiency effects model further reveals that firm specific characteristics, namely the capital structure, profitability, firm size and regional location, are crucial determinants of firms’ efficiency. Since firm size has a positive effect on inefficiency, small and medium-sized electronic firms appear to demonstrate a higher level of efficiency than their larger counterparts. In the TFP analysis, Hong Kong firms recorded both higher TFP growth and technological progress compared to their Chinese counterparts. In contrast, Mainland Chinese firms performed better in the context of managerial and scale efficiency.
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