Total Factor Productivity Measurement Of China's Equipment Manufactoring Industry

Equipment manufacturing industry is the largest one in China, and also determine the level of the entire national economy. A highly developed manufactury is an important indicator for its upgrading and a key factor to determine the countries in the process of economic globalization. Revitalize the equipment manufacturing industry will be a major task for China. At present, the equipment manufacturing industry has been attached great attention to Chinese government. "Eleventh Five-Year Plan" in the CPC Central Committee on the National Economic and Social Development clearly stated that they will greatly support the equipment manufacturing industry. In February 2006 the State Council issued oppions for how to speed up the revitalization of the equipment manufacturing industry, which pointed out that the equipment manufacturing industry is the basic industry for the development of national economy to provide technical equipment. In 2009, to overcome the financial crisis, the iequipment manufacturing industry was also been included in the top ten industrial revitalization plans.The sustained and rapid growth in the equipment manufacturing industry attached many attention in domestic scholars, but most of their studies focused on qualitative analysis such as development strategies and revitalization measures. But the quantitative study in equipment manufacturing industry of economic growth were less, especially the quantitative research for the equipment manufacturing industry Total Factor Productivity. To maintain sustained growth in the equipment manufacturing industry needs to shift from extensive to intensive in economic growth, to improve the quality of economic growth, to promote the realization of the scientific concept of development. An important index for the quality of economic growth is the total factor productivity. In order to find an effective way for the total factor productivity increased, it is necessary to use more scientific concepts, theories and measurement methodology to reflect China's actual level of total factor productivity, as well as the relationship of total factor productivity.Equipment manufacturing industry is a pillar industry of national economic development, and the importance of scientific measurement has been described earlier. Therefore, this article from the regional of the provincial level, using the provincial level panel data of 1999-2007 National equipment manufacturing, using the more scientific method in three-stage DEA for the first time proposed by Fried at 2002. It measure the industry of total factor productivity of China's equipment manufacturing industry from the time evolution and molecular development of, and on this basis, and analyse its spatial differences. In the final, we draw the corresponding conclusions, in order to improve some policy insight in China's equipment manufacturing industry total factor productivity.The three-stage DEA biggest advantage is the ability to remove the external environment and the random disturbance on the impact of total factor productivity calculation, reach a more realistic technical efficiency, scale efficiency and returns to scale. This superiority complex just adopt the development of our country. China has vast territory and huge development gap between the provinces. It facing the external environment, history variety, so it is difficult to reflect the real reality in anglicising the equipment manufacturing industry evaluation of the provincial total factor productivity, if not consider the external environment and random disturbances.This thesis is divided into seven chapters, the specific sections and basic ideas are as follows:The first chapter is the Introduction. It introduces the background of the reality of this study, including the status of China's equipment manufacturing industry, as well as the important position in the national economy, in order to have a preliminary understanding for this study. Followed it explain the meaning of research, ranging from the theoretical level, method level, as well as practical dimensions. The third is define the concepts of "equipment manufacturing" and "total factor productivity". Finally, there is the approach to the study and possible innovations in this article and shortcomings.The second chapter is a literature review from two parts to explain. The one is total factor productivity measurement methods of research, including Solow residual value method, extended Solow residual value method, data envelopment analysis, stochastic frontier analysis, and this paper, three-stage DEA method; the other one is the research on the equipment manufacturing industry, including the impact of the development of China's equipment manufacturing industry and constraints, development strategies and revitalization measures, as well as total factor productivity in the equipment manufacturing industry research.ChapterⅢintroduce details the measurement methods-three-stage DEA method which will be used. Because the method is the integration of the data envelopment analysis (DEA) and stochastic frontier analysis (SFA), therefore, before introducing three-stage DEA method it also gave a brief introduction to these two methods. In addition, the calculation also introduced dynamic changes in total factor productivity Malmquist index approach.Chapter IV is the heart of empirical part. It measure the total factor productivity of national equipment manufacturing industry in 2007. In order to demonstrate a more comprehensive three-stage DEA method of calculation, the chapter adopt the three-stage DEA method mainly. Starting from the provincial regional level, it tell details rendering of China's equipment manufacturing industry in 2007 total factor productivity measurement process. In later chapters, because of space limitations, it omit the complex calculation process and present the relevant calculations directly. The results indicate that total factor productivity, relatively low in China's equipment manufacturing industry.After remove the exclusion of the external environment and the effect of random disturbances, the national average total factor productivity had a large decrease, from 0.724 down to 0.477. And the four external environmental factors in this chapter have significant effect for the slack variablility and they reflect the external environmental factors to enhance the provincial total factor productivity to a significant extent.Chapter V is the changes of total factor productivity studies in a national equipment manufacturing industry. Starting from the provincial regional level, it measure the total factor productivity of China's equipment manufacturing industry 1999-2007. It found the score average is only 0.423 in whole factor productivity in 1999-2007, less than half of the production frontier, and in the sample period, the slow pace of upgrading, with much room for growth. The study found there is no s convergence andβconvergence of the absolute convergence in the equipment manufacturing industry total factor productivity in every province, but there are convergence divergence between the three rigions of East,West and the middle region. Finally, because the static DEA model can not measure dynamic changes in productivity, so it use the Malmquist indices calculated dynamic changes. The results showed that the equipment manufacturing industry average annual growth of total factor productivity 11.8%.To break it down and found an average annual growth of 11.7% IN technical progress, technical efficiency grow 0.1% annual, so the equipment manufacturing industry total factor productivity growth was mainly due to advances in technological frontier, a small contribution to the growth of technical efficiency.Chapter VI is to measure 7 sub-sectors total factor productivity of 2007 in equipment manufacturing industry. In the previous chapters, we research the manufacturing sector as a whole sectors. So the study of the chapter content is measure factor productivity from different industry to analysis China's equipment manufacturing industry total factor productivity developments in depth. Studies have shown that various sub-sectors of equipment manufacturing industry total factor productivity are mainly distributed in between 0.3-0.6. In general, the total factor productivity is low, and between the different sub-sectors still have a larger total factor productivity differences. And the various provinces has a larger difference in different sub-sectors in the total factor productivity, so the policy of the formulation of industrial must be adapted to local conditions.The final chapter is a summary of this article and presented policy recommendations in accordance with the relevant research. For the questions of equipment manufacturing industry, this chapter raise some countermeasures from four sectors, such as raising the scale of efficiency, promoting ability of technological progress, promoting human capital increase and narrowing regional differences.