Effects Of Misallocation Research Articles

Assessing the Effect of Factor Misallocation on Grain Green Production Capacity: A Case Study of Prefecture-Level Cities in Heilongjiang Province

Improving the efficiency of factor allocation in food production is the foundation for accelerating the formation of new quality productivity and achieving an agricultural green transformation. However, there has been no scholarly focus on their mechanisms and the interactions involved. This exploration is an important reference for enhancing the green production capacity of major grain-producing areas. In this study, 13 prefecture-level cities in Heilongjiang Province, China’s largest grain production base, were selected as the research samples. A model for identifying factor misallocation and grain green total factor productivity (AGGTFP) was constructed to identify the spatiotemporal differences in factor misallocation and green total factor productivity. A fixed effects model was used to explore the impact of single-factor misallocation and the interaction of dual-factor misallocation with AGGTFP. The results show that from 2004 to 2022, the AGGTFP in 13 prefecture-level cities in Heilongjiang Province has shown a slow growth trend. The inhibitory effects of single-factor misallocation of land, labor, and capital on green total factor productivity are sequentially enhanced. The interaction effects of capital misallocation and labor misallocation and labor misallocation and land misallocation strengthen the inhibitory effects of misallocation on the AGGTFP. Therefore, it is necessary to further promote the optimization of production factors and improve the green production capacity for grain.

Manufacturing growth and labour misallocation from the perspective of industry linkages: evidence from China

ABSTRACT This study investigates the impact of labour misallocation on economic growth in China’s manufacturing sector from the perspective of industry linkages and analyzes the role of these linkages in this relationship. Utilizing data from various Chinese industries and the input-output table, the findings are as follows: First, neglecting industry linkages results in an overestimation of the negative impact of labour misallocation on manufacturing growth. Second, manufacturing subsectors partially mitigate the impact of misallocation by adjusting the input structure of intermediate products. Third, there is heterogeneity among the subsectors in their ability to offset the negative impact of labour misallocation. This study corrects the overestimation of the negative effects of labour misallocation in the existing literature, deepening our understanding of the market’s role in the allocation of production factors. The study provides theoretical insights and practical references for the economic development and industrial transformation of manufacturing-led countries, emphasizing the significance of industry linkages in analysis and application, and offering a basis for formulating differentiated industrial factor allocation policies.

The Impact of Labor Misallocation on Carbon Emissions in China: Whether Digital Space Matters

Digital networks have brought about more frequent economic interaction. Labor misallocation influences regional green development through digital channels. Constructing a digital divide matrix among 30 Chinese provinces, a spatial Durbin model was applied in this paper to address the digital spillover of labor misallocation on carbon emission. We obtained the following research findings: (1) The digital divide in China tends to spread from east to west between 2006 and 2021. (2) Labor misallocation impacts carbon emissions through digital spillover. Specifically, labor misallocation increases local carbon emissions, as well as carbon emissions in digital adjacent regions. (3) The widening digital divide exacerbates the digital spillover effects of labor misallocation. The result’s plausibility was further verified by generalized spatial two-stage least squares. (4) Labor misallocation increases carbon emissions when the digital divide exceeds a threshold. The results provide an effectual reference for digital governance in Chinese carbon emissions.

How does digital finance affect rural capital misallocation? Evidence from China

ABSTRACT Digital finance can take advantage of new financial services to support economic growth. Its effect on rural capital misallocation is valuable to be discussed as rural capital misallocation has severely restricted rural development worldwide. This paper, with data from Chinese counties, studies the effect of digital finance on rural capital misallocation and further analyzes how it acts by exploring the moderating role of industrial structure upgrading. The system GMM method is applied to resolve the path dependence and identify the dynamic effects of capital misallocation. The findings include that (1)rural digital finance has reduced the capital misallocation for the rural area in China; (2)industrial structure upgrading will strengthen the negative effect of digital finance on capital misallocation which is more significant in the eastern and western regions, as well as in the capital over-allocation regions in rural China; (3)the impact of rural digital finance on rural capital misallocation has a spatial spillover effect, and digital finance has reduced capital misallocation not only in the local but also in neighbouring regions. This study contributes to the existing rural digital finance literature and will help regions reduce capital misallocation by improving rural digital finance.

Enhancing agricultural environmental performance: Exploring the interplay of agricultural productive services, resource allocation, and marketization factors

Exploring the factors that affect agricultural environmental performance enriches our understanding of the environmental implications of agricultural practices. Using panel data for 79 prefecture-level cities in the middle and lower reaches of the Yangtze River in China from 2003 to 2020, this study theoretically determines and empirically tests the relationship between agricultural productive services, resource allocation, and agricultural environmental performance. The results show that agricultural productive services can significantly improve agricultural environmental performance. Marketization process has a positive moderating function on the direct effect of agricultural productive services on agricultural environmental performance, which increases with the improvement of marketization process. While marketization process has a significant moderating function on the mediating effect of labor misallocation and capital misallocation in both the first and second halves of the path, marketization has a significant moderating function on the mediating effect of land misallocation in the first half of the path. Based on results, we provide reference for agricultural policymakers, especially in countries dominated by smallholder farmers, to design policies on agricultural productive services, agricultural resource allocation, and market-oriented reforms, as well as to formulate differentiated agricultural environmental performance policies.

Misallocation of debt and aggregate productivity

We propose an accounting framework that maps the dispersion of borrowing costs along the debt maturity structure to the misallocation of productive resources. Specifically, we decompose the effects of credit misallocation into two distinct channels: limited access to debt finance (the scale effect) and distortion in the composition of debt across maturities (the composition effect). Our estimates suggest that an efficient allocation of debt could increase TFP by approximately 14.4% in the US manufacturing sector, of which roughly 10% is attributable to the composition of debt. Reducing inefficiencies in the composition of debt would result in TFP losses due to access and composition of factor inputs being reduced by 9.7% and 0.4%, respectively.

The impact of market coordination on urban green total factor productivity: An analysis of the mediating effect of factor misallocation

Promoting market coordination and enhancing the efficiency of green growth is a necessity for China’s effective economic development. Using panel data from 2007 to 2020, this paper conducts a comprehensive study on 226 cities at the prefecture-level and above, combining theoretical analysis and empirical tests to systematically explore the impact of market cohesion on urban green total factor productivity (GTPF) and the mediating role of factor mismatch. Findings demonstrate that market coordination maximizes urban GTPF. At the mechanism level, factor mismatch plays a mediating role, and market coordination can enhance GTPF by addressing capital and labor mismatch. In terms of heterogeneity analysis, market coordination significantly promotes GTPF positively in the east-central region and negatively in the western region. In terms of technological progress and technical efficiency, the eastern region shows a larger significance than the central and western regions combined. In view of the above, the concept of market coordination development has been implemented to promote GTFP in cities.

How does Financial Misallocation Affect Enterprise Transformation and Upgrading based on the Perspective of Digital Transformation

Financial misallocation deviates capital factors from prices which should be determined by market supply and demand. Not only does it exacerbate economic instability at the macro level, but also reduces the operating efficiency of enterprises at the micro level. Using China A-share listed enterprises from 2008 to 2020 as the original research sample, this paper empirically investigates the impact of financial misallocation on the digital transformation of enterprises and its mechanism of action, and conducts heterogeneity analysis based on enterprise characteristics. Findings demonstrate that: (1) Financial misallocation significantly inhibits the digital transformation of enterprises; (2) Financial misallocation decelerates the transformation process by obstructing the innovation capability of enterprises; (3) The inhibitory effect of financial misallocation on digitalizations of non-SOEs and SMEs is far more evident. This study provides a meaningful empirical basis and policy enlightenment for financial resources to effectively empower the real economy and promote the high-quality development of China’s economy.

Does Financial Resource Misallocation Inhibit the Improvement of Green Development Efficiency? Evidence from China

Improving the efficiency of green development is an important means of achieving high-quality development, and the optimal allocation of financial resources is the core factor in promoting green development. Based on the panel data of 30 provinces in China taken from 2005 to 2021, this paper constructs a financial resource misallocation (FM) index and green development efficiency (GDE) measurement system, empirically examining the impact and transmission path of FM on the GDE from the dual perspectives of financial resource element mismatch and structural mismatch. First, the results show that financial misallocation is the key factor inhibiting the improvement of GDE, and with the improvement of GDE, the inhibitory effect of financial misallocation decreases first and then increases in an inverted V-shaped trend. Second, the inhibitory effect of financial resource structure mismatch on GDE is greater than that of financial resource element mismatch. Moreover, after the degree of financial marketization is distinguished, this inhibitory effect is more evident in the regions with a low degree of financial marketization. Third, through mechanism analysis, we found that FM affects the improvement of GDE by inhibiting financial resource agglomeration through enterprise technological innovation and industrial structure height.

Financial constraints, capital misallocation and firm’s total factor productivity (TFP) loss – empirical evidence from listed manufacturing companies in China

ABSTRACT Based on the theoretical mechanism that ‘financing constraints (investment-cash flow sensitivity) → capital misallocation → firm’s total factor productivity’ and ADL(2,2) model, implied cost model, total factor productivity model, panel regression model and mediation effect model, we empirically investigate the impact of financing constraints on TFP loss and the mediating effect of capital misallocation. Finance and market transaction data for manufacturing companies listed on Shanghai and Shenzhen stock exchanges during 2009–2019 are used in the empirical study. Chinese manufacturing companies were shown to have investment-cash flow sensitivity. The empirical analysis proved that financing constraints not only have direct negative impact on the firm’s TFP directly but also negatively affect the TFP by the mediating effect of capital misallocation. Moreover, firm heterogeneity analysis showed that the above two impacts were greater for non-stated owned firms, small and medium-sized firms, and young firms than stated-owned firms, big firms and mature firms.

Misallocation and Capital Market Integration: Evidence From India

We show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity for affected industries in India. The staggered liberalization of access to foreign capital across disaggregated industries allows us to identify changes in firms' input wedges, overcoming major challenges in the measurement of the effects of changing misallocation. Liberalization increases capital overall. For domestic firms with initially high marginal revenue products of capital (MRPK), liberalization increases revenues by 23%, physical capital by 53%, wage bills by 28%, and reduces MRPK by 33% relative to low MRPK firms. The effects of liberalization are largest in areas with less developed local banking sectors, indicating that inefficiencies in that sector may cause misallocation. Finally, we propose an assumption under which a novel method exploiting natural experiments can be used to bound the effect of changes in misallocation on treated industries' aggregate productivity. These industries' Solow residual increases by 3–16%.

Labor misallocation and productivity growth in Vietnamese manufacturing firms

PurposeThis research identifies the level of labor misallocation in Vietnamese manufacturing sector for the period 2005–2019. The paper also examines the effects of labor misallocation on productivity in Vietnamese manufacturing firms controlled by industry- and firm-level factors.Design/methodology/approachThe level of labor misallocation and efficiency gains in total factor productivity (TFP) are assessed using Vietnam's annual enterprise survey data for the period 2005–2019 and Hsieh and Klenow (2009) productivity decomposition framework.FindingsThe results indicate four main points. Firstly, labor misallocation tends to increase from 2005 to 2019. Secondly, labor misallocation by firm ownership and technology level is found to be highest in state-owned enterprise and low-tech industries, whereas foreign direct investment and high-tech firms have lowest labor misallocation. Labor misallocation in small- and medium-sized enterprises is higher than in large-sized enterprises and is equivalent to overall sample. Thirdly, labor misallocation decreases productivity in manufacturing firms. The firm-level factors such as bigger technology gap, external capital, firm scale and poor liquidity ratio decrease productivity in manufacturing firms. Whereas firm-level factors such as Vietnam's accession to the WTO, reasonable corporate tax structure, capital intensity, human capital and firm age increase productivity of manufacturing firms. The industry-level factors such as FDI horizontal, forward and supply backward spillovers promote productivity from foreign firms to domestic ones. Meanwhile, only backward linkages reduce productivity of firms. Finally, by difference-in-differences (DID) method, the result indicates foreign firms have higher average labor productivity than domestic firms before or after Vietnam's accession to the WTO. After joining WTO, the average labor productivity of foreign firms is increased by 854 million VND while the average labor productivity of domestic firms is increased by 895 million VND. The DID between the two groups (domestic firms and foreign firms) before and after Vietnam's accession to WTO is 41 million dong.Research limitations/implicationsThe main limitation of the study is that the market is assumed perfectly competitive. The model focuses on selective factors affecting labor productivity.Originality/valueThe focus of many previous international research papers was generally to look at the level of labor misallocation in developed countries. However, knowledge about labor misallocation is limited, particularly in the context of developing countries. This paper examines the level of labor misallocation by region, ownership, level of technology and firm size on productivity and the effect of misallocation on productivity in Vietnamese manufacturing firms.Peer reviewThe peer-review history for this article is available at: https://publons.com/publon/10.1108/IJSE-09-2021-0552.

Spatial Spillover Effects of Resource Misallocation on the Green Total Factor Productivity in Chinese Agriculture

Continuous resource misallocation not only results in total factor productivity loss but also leads to ecological degradation. Therefore, in the process of changing from extensive growth to intensive growth, Chinese agriculture should pay attention to the problem of resource misallocation. There is currently a lack of relevant research, especially concerning the spatial spillover effects of resource misallocation at the city level. To fill this gap, we employ a spatial panel model for empirical testing on the basis of measuring agricultural green total factor productivity (GTFP) in 306 cities in China from 1996-2017. We found that there is positive spatial autocorrelation in Chinese agricultural GTFP, but it decreases year by year. Misallocation in land, labor, machinery and fertilizer all directly hinder the local GTFP. The eastern is mainly negatively affected by neighbor resource misallocation, while the central and western are mainly negatively affected by local resource misallocation. Finally, the indirect effect of neighbor resource misallocation on GTFP gradually shifts from inhibiting effect to a facilitating effect with increasing spatial distance. These findings have clear policy implications: Chinese government should strengthen agricultural green technology innovation and diffusion, strengthen environmental regulation and promote the free movement of labor between regions and sectors.

Analysis on the effect and mechanism of land misallocation on carbon emissions efficiency: Evidence from China

The land misallocation between industrial land and commercial land should be emphasized when analyzing carbon emissions efficiency. This paper tests the effect and mechanisms of land misallocation on carbon emissions efficiency using Chinese city-level data in the period 2009–2017. Our study shows that the misallocation between industrial land and commercial land in China has a significant and robust negative impact on carbon emissions efficiency. The influence has significant heterogeneity across cities. Through the mechanism analyses, this paper confirms that land misallocation affects carbon emissions efficiency through four internal mechanisms: the lagged upgrading of urban industrial structure, the development of high-pollution and energy-consuming industries within the secondary industry, the lagged upgrading of urban technological innovation, and the lagged development of high-end tertiary industries within the tertiary industry. This research enriches the literature on factors that influence carbon emissions efficiency and provides a new perspective for government to improve policymaking on this topic.

Analysis of the Spatial Effect of Capital Misallocation on Agricultural Output—Taking the Main Grain Producing Areas in Northeast China as an Example

Increasing agricultural output by reducing capital misallocation is a capital-saving strategy, as it does not require the usage of additional inputs. Based on the panel data of 36 prefecture-level cities in Northeast China from 2011 to 2020, this paper uses the spatial Durbin model to test the impact of capital mismatch on agricultural output and its mechanisms. We found that capital misallocation is prevalent in prefecture-level cities, showing a spatial distribution characteristic of “north-south confrontation and central collapse”, with a significant spatial spillover effect. A one-unit increase in capital misallocation leads to a 16.00% decrease in local agricultural output and a 1.80% decrease in adjacent areas. However, with the optimization and upgrading of the agricultural industry and agricultural technology progress, the inhibitory effect of capital misallocation on the growth of agricultural output is constantly weakening. The above conclusion still holds after a series of robustness tests. The conclusion of this paper provides policy inspiration for promoting the rational allocation of factors between cities and regions, coordinating regional coordinated development, and then promoting the sustainable growth of agricultural output.

How can China's sustainable development be damaged in consequence of financial misallocation? Analysis from the perspective of regional innovation capability

AbstractChina's extensive economic growth has been accompanied with high levels of pollution, and excessive energy consumption has brought serious pollution problems. The use of financial resources to regulate green production modes and encourage high‐quality economic development has become a major focus in academia. At the same time, growth enterprise market (GEM) enterprises, which mainly operate in technology‐intensive industries, are assumed to have a simulating effect on regional innovation. Therefore, this paper utilizes the capital return differences of 4437 listed companies and 920 GEM companies based in 30 provinces of China from 2008 to 2018 to quantitatively analyze the levels of financial misallocation. With two‐stage regression method, the direct effect of financial misallocation on regional green total factor energy efficiency (GTFEE) and the indirect impact observed when taking regional innovation as an intermediary variable are discussed. Furthermore, dynamic threshold panel regression and heterogeneity analysis are used to verify the above nonlinear relationship. The empirical findings indicate that financial misallocation enhances innovation capability and further restrains GTFEE. With an improved degree of marketization and environmental regulation, the inhibitory effect of financial misallocation on GTFEE is more significant.

Market formation in China from 1978

This paper studies the formation of market economy in China from 1978 to 1992, a period in which market economy was introduced and developed alongside planned government procurement for agricultural goods. Under the “dual track system” (DTS), rural farmers were obligated to fulfill government procurement before selling to the market, whereas urban consumers enjoyed de facto subsidies to agricultural products. Using a neoclassical general equilibrium model with heterogeneous firms and workers and input-output linkage, this paper exploits historical data and analyzes allocation, prices, and the formation of markets in China during this DTS period. Theoretically, while DTS will distort the resources allocation between rural and urban (misallocation effect), it selects workers and farmers in the rural (selection effect). What is more, comparing to the economy under Soviet-style big bang reform, DTS activates industrialization by providing intermediate goods with lower-than-market price (activation effect). Quantitatively, directly switching to market economy in 1978 would decrease total output by 4.5% as the activation effect dominates. On the intensive margin, reform on DTS (procurement price was getting closer to market price) had contributed to total output by 4.4% from 1978 to 1992.

From Imitation to Innovation: Where Is All That Chinese R&D Going?

We construct an endogenous growth model with random interactions where firms are subject to distortions. The TFP distribution evolves endogenously as firms seek to upgrade their technology over time either by innovating or by imitating other firms. We use the model to quantify the effects of misallocation on TFP growth in emerging economies. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007–2012. The estimated model fits the Chinese data well. We compare the estimates with those obtained using data for Taiwan and perform counterfactuals to study the effect of alternative policies. R&D misallocation has a large effect on TFP growth.

Assessing the impact of energy internet and energy misallocation on carbon emissions: new insights from China.

With the deterioration of environmental quality caused by fossil energy use, the research on energy internet and energy misallocation is of critical relevance to achieve low-carbon sustainable development. However, we find that the relevant research that analyzes energy internet and energy misallocation on carbon emissions under the same framework is ignored. For this purpose, the generalized method of moments (GMM), panel threshold model, and spatial analysis (deviation ellipse, hotspot analysis, and geographically and temporally weighted regression (GTWR)) model were applied to investigate the impact of energy internet and energy misallocation on carbon emissions using panel data of 30 provinces in China from 2004 to 2018. The major statistical results include the following: (1) energy misallocation significantly contributes to carbon emissions, while energy internet inhibits carbon emissions. Energy internet can negatively moderate the positive effect of energy misallocation on carbon emissions. (2) The effect of energy misallocation on carbon emissions reveals an inverted "U-shaped" characteristic of first promoting and later inhibiting, but the inhibiting effect is insignificant. Moreover, the marginal effect of energy misallocation on carbon emissions decreases when the energy internet crosses the second thresholds consecutively, while the marginal effect of the energy internet on carbon emissions shows an inverted "N" shape. (3) Compared with the under-allocated regions, the promotion effect of energy misallocation on carbon emissions and the inhibitory effect of energy internet on carbon emissions are stronger in the over-allocated regions, while the energy internet has a more significant negative moderating effect on energy misallocation. (4) The gravity center of China's carbon emissions gradually shifts to the northwest with time. The longitude of the gravity center (east-west direction) changes greatly, while the latitude of the gravity center (north-south direction) changes less. Besides, the carbon emission hotspot regions centered on Shanxi spread to the neighboring provinces, which form a high-high agglomeration region, and the cold spot region dominated by Qinghai, Guangxi, and Guangdong forms low-low agglomeration characteristics. Finally, the GTWR model shows that the impact of energy internet and energy misallocation on carbon emissions shows significant hierarchical, banded, or block-like characteristics in spatial distribution.

Land misallocation and urban air quality in China.

In China, the local government's "land for development" strategy has led to a large number of urban construction land allocated to the industrial field, which has promoted the rapid development of industry and economy in the short term but also brought serious environmental quality losses. This paper systematically sets out how land misallocation works on urban air quality and employs the spatial Durbin model (SDM) to conduct an empirical analysis on the panel data of 283 China cities at or above the prefecture level. The result shows that, stimulated by financial maximization and political promotion, in order to obtain more fiscal revenue and growth performance, local governments prefer to allocate a large number of urban construction land to industry and related fields, which leads to the underestimation of industrial land price and the misallocation of land resources. Land misallocation has exerted significant inhibiting effects on the air quality of local and their surrounding cities through inhibiting the upgrading of industrial structure. Further analysis reveals that the bigger the city, the lesser the inhibition effects of land misallocation on upgrading of industrial structure and urban air quality and vice versa. The conclusions of this paper can provide a useful reference for local governments to optimize land allocation, promote economic restructuring, and environmental quality upgrading.