Okayama Economic Review
Published by the Economic Association of Okayama University

Online ISSN 2433-4146
Print ISSN 0386-3069

Productive Efficiency Differences among Chinese Cities : A Stochastic Frontier Approach

Xuan, Chao
Nakamura, Ryohei Okayama University
This paper treats the empirical issue related to the urban productive efficiency. First, we construct a model incorporating urban inefficiency term and estimate a stochastic frontier production function at urban level. Next, we compare technical efficiency across Chinese cities during 1997-2007 by using estimated results. The urban technical inefficiency effect is found to be significant in many cities. Then, in the way of constructing the specification of the technical inefficiency in terms of various capital explanatory variables, we analyze the determinants of technical inefficiency of individual cities, and explore how the urban technical inefficiency is influenced by capital density, FDI, the domestic investment, while the impact of technical inefficiency on capital variables is investigated. From the empirical results, FDI is able to reduce effectively the technical inefficiency. Capital intensive industry would be the engine of economic growth in the future.
technical inefficiency
urban productivity
stochastic frontier approach
chinese cities
論説 (Article)