Abstract
Because it has a large, growing population but only a small share of land that can be cultivated, it is important for China to enhance its agricultural productivity through technological progress. Using data envelopment analysis, we decompose productivity into pure technical efficiency change, scale efficiency change, and technological progress. We thereby find that annual growth of agricultural productivity in China is about 2.2 percent. Technological progress improved agricultural productivity at a rate of 4.2 percent annually from 1980 to 2005, but the technology efficiency dampened it by an average of 1.9 percent per year. TFP growth and technological progress are faster in eastern provinces than for those in central and western regions. Relative technology efficiency was stable in eastern provinces but declined in the central and western provinces during the study period. Thus, it was technological progress that boosted the TFP growth in China’s agriculture. Tests also reveal that σ convergence existed in Chinese agricultural productivity.
Highlights
Making agriculture sustainable has been a critical element of China’s economic development plan
Li and Meng (2006) came to a more consistent set of conclusions for the growth rate of total factor productivity (TFP), since they found the technical innovation rate and technical efficiency had the same directional effect on TFP but with somewhat different magnitudes, which may have been caused by their use of the incompatible data that was discussed earlier
We can draw five conclusions: 1) The annual average growth rate of TFP in China was 2.2 percent between 1980 and 2005, with technology change increasing by 4.2 percent and relative technical efficiency declining by 1.9 percent yearly; 2) Agricultural productivity change explains agricultural production change from 1980 to 1989, but after 1990 the agricultural production was influenced by factors other than productivity; 3) For regions, the growth rate of TFP and technology change in East China is higher than in Central China, but the growth rate in Central China was higher than the ratein the West
Summary
Making agriculture sustainable has been a critical element of China’s economic development plan. The country’s economic reform, which started in 1978, brought immediate rapid growth of agriculture. The growth started to fade after the effects of the Household Responsibility System (HRS) were exhausted in the mid-1980s (Lin 1992; Huang 2004). The average annual growth rate of real agricultural output fell to 4.0 percent during the period 1985 to 1989, compared to a rate of 9.4 percent from 1981 to 1984. The annualized growth rate rebounded to 8.4 percent for the period 1992 to 1995, China’s agricultural productivity growth has since slowed remarkably. The nation’s rural countryside has been in a period of relative stagnation since 1996 (see Figure 1)
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