Abstract
This paper investigates the contribution of producer services to total factor productivity (TFP) in China. According to data availability, producer services are splited into wholesale trade, transport, finance, insurance, housing and technology services. The impact on TFP is explored for geographical areas, including the Eastern, the Middle and the Western part of the country. At the national level, wholesale trade stimulates TFP growth, while transport leads to decrease. Results are mixed at the regional level. Wholesale trade shows a positive impact in the Eastern part. Housing and technology services have negative effect in the middle part. In the West, producer services do not affect TFP growth at all. Hence, governments should adopt growth promoting policies based on regional characteristics. Moreover, a tighter integration of producer services and manufacturing is appropriate to speed up TFP growth.
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