Green total factor productivity and its decomposition of Chinese manufacturing based on the MML index:2003–2015

Abstract

Manufacturing industry is an important part of economic development. Recognizing the sustainable development of regional manufacturing has an important guiding role in the formulation of environmental policies. Based on the meta-frontier Malmquist-Luenberger (MML) productivity index, this paper uses Chinese provincial panel data (2003–2015) to measure the green total factor productivity (TFP) of China's manufacturing. It is decomposed into the following: efficiency change (EC), change of the best practice gap ratio (BPC) and change of technical gap ratio (TGC). We compared the regional differences in green TFP growth in manufacturing in all provinces, analyzed regional and time differences in green TFP and the decomposition of manufacturing between regions and identified innovative regions. The results show that: (1) The average annual growth rate of green TFP in Chinese manufacturing is 0.85% with technological progress playing a key role. (2) There are differences in the causes of the increase in green TFP in all regions. The eastern region and the western region are driven by technological progress while the central region depends on technology catch-up effects. (3) Guangdong and Qinghai are two different types of global innovation regions with Guangdong driven by technological innovation and Qinghai driven by strict environmental protection systems.