Productivity Growth-Accounting for Undesirable Outputs and Its Influencing Factors: The Case of China

Junfeng Zhang,Hong Fang,Xu Wang,Bo Peng,Siran Fang

doi:10.3390/su8111166

Abstract

Presently, China’s social development is facing the dilemma of supporting economic growth and reducing emissions. Therefore, it is crucial to analyse productivity growth and examine its relationship with influencing factors in China. This study evaluated the total factor productivity (TFP) growth of 30 provinces in China by adopting the Malmquist-Luenberger (ML) productivity index and incorporating undesirable outputs from 2011–2014. Then, a Tobit regression model was employed to explore the factors that influence China’s TFP growth. The results show that the average annual growth of the Malmquist-Luenberger productivity index was lower than that of the traditional Malmquist (M) productivity index growth during the research period. The findings reveal several key conclusions: First, the true TFP growth in China will be overestimated if undesirable outputs are ignored. Second, technical changes are the main contributor to TFP growth. Third, there are huge regional disparities of productivity growth in China. Fourth, coal intensity, environmental regulations, and industrial structure have significantly negative effects on productivity growth, while real per capita gross domestic product (GDP) and foreign direct investment (FDI) have strongly positive effects on productivity growth.

Highlights

China has experienced rapid economic growth following its reform and opening-up policy in 1978
Zhang et al applied the ML index to evaluate the growth of China’s total factor productivity (TFP), and the results showed that the true TFP growth in China will be overestimated if undesirable outputs are ignored [6]
A comparison between the ML index and M index shows that the TFP, technical change, and efficiency change considering undesirable outputs were reduced by 3.2%, 0.3%, and 2.9%, respectively, compared with their use ignoring environmental outputs

Summary

Introduction

China has experienced rapid economic growth following its reform and opening-up policy in 1978. In 2010, China became the largest energy consumer, accounting for 20.3% of global consumption [2]. China’s energy usage faces several challenges, such as low resource utilization efficiency and high pollution emissions, which might restrict China’s sustainable economic and social development. To respond to this problem, protect the environment and achieve sustainable development, the State Council issued the Twelfth Five-Year Energy Saving and Emissions Reduction Comprehensive Plan [3] and set the goal of reducing energy consumption by 16% per 10,000 CNY GDP by 2015 from 2010 levels and 32% from 2005 levels in 2011 [4]. At the 2015 climate conference in Paris, China’s government promised to reduce greenhouse gas emissions by 60%–65% per unit of GDP by 2030 compared the levels of 2005

Methods

Results

Conclusion