A Study On TFP, TE And TP Of Service Industry In China Under The Influence Of FDI: Based On Stochastic Frontier Approach And Panel Data Analysis

With the development of service industry and service trade, service industry is becoming the new direction of Foreign Direct Investment(FDI). Now the Chinese service industry is far below the level of the developed countries, so there's enough space for us to improve. To improve our service industry, we should not only pay attention to quantity but also to the improvement of quality. During the past years, FDI inflow played an important role in the development of economy and technology. Many researches suggest that FDI inflow is the roll booster of the speedy developing Chinese economy, and at the same time, it's a direct source of technical progress. Then, is it the same case in service industry? How is the productivity of the Chinese service industry?After studying carefully on many researches from home and abroad, based on the stochastic frontier approach (SFA) and panel datas, this paper analyses the total factor productivity(TFP), technical efficiency(TE) and technical progress(TP) in our service industry, considering the affection of FDI. The aim of this peper is to analyse quantificationally the productivity of service industry under the influence of FDI inflow. The innovation of this article lies in the the initial attempt to analyse the productivity of service industry quantificationally with the stochastic frontier approach, based on the influence of FDI inflow.The research results are presented as follows: From 1992 to 2007, the TE of the service industry in China had growed fastly. While from 1998, the level of TE stayed at a high level and its growth rate slowed down. The growth rate of TP showed a negative change which resulted in the negative change of TFP. Although FDI inflow had a positive effect on TE and TP, the outside technical spill-over effect of FDI inflow couldn't outweight the inside slowdown of the growth rate of TE and TP in china. To improve the productivity of service industry in China, we should pay more attention to the inner technical innovation and the absorption of technology.