Stochastic Frontier Analysis On The Total Factor Productivity Of China's State Farms

During "the Tenth Five-Year Plan" period, our central government carried out a series of policies to support and benefit agriculture, rural areas and farmers, which greatly promoted the development of China's State Farms Economy. However, policy couldn't solve all problems. On one hand, State Farms Economy in the reform is far from perfect. What is the driving force of State farms economy, and how to promote State farms economy to change the mode of economic growth are problems of great significance and have received high attention from economists and top administrators. And this paper tries to answer these questions based on empirical study. On the other hand, available literature couldn't point out the driving force of China's State Farms Economy from the perspective of productivity, and this paper will fill the gap.Basing on research on previous literature and related theories, this paper is written in the Analysis Framework of Neo-classical growth theory. It analyses input and output dates of the first, second, and third industry of China's State Farms among 2001-2006, and calculates TFP growth rates of each industry in each state with growth accounting methodology to find out the driving force of China's State Farms Economy. It also applies Stochastic Frontier Production Model to analyses TFP growth rates, identifying the driving force and the resistance force of it.In this paper, the main conclusions are below: Firstly, The main power of economic development is the increasing inputs of labor and capitals. The production efficiency of China's State Farms has been improved obviously, while TFP growth has not been the main power yet, and the extensive growth style still has not been changed fundamentally during the development. Secondly, the main power of TFP growth is Frontier Technology Progress. During "the Tenth Five-Year Plan" period, many factors, including the pressure of marketing, the changes of property right structure, the investments on agricultural capital, technology, system and infrastructure, the economic globalization and the economic periodic development, accelerated the Frontier Technology Progress. The third, the worsening technical efficiency, especially the second and third industries, has hindered it. The lack of modern enterprise system and the poor geographic location of State Farms have caused serious barriers to technology diffusion, which has hindered the technical efficiency as the Frontier Technology progress. The worsening Scale efficiency and the improvement of resource allocation efficiency have not contributed much to TFP growth, and technology efficiency. The last, scale efficiency, and allocation efficiency may be the driving force of TFP growth in the future.