New estimates and a decomposition of provincial productivity change in China

Productivity and efficiency change lies at the heart of achieving sustainable growth in China. This paper computes and decomposes provincial-level Färe–Primont TFP indexes for the period 1978 to 2010. On average across provinces, we find evidence of rapid TFP growth mostly due to technical change, but with changes in scale–mix efficiency also playing a supplementary role. Considerable heterogeneity from province to province is also documented both with respect to the rate of TFP growth and its components. Policy implications are discussed.