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Total Factor Productivity of Chinese Listed Firms and Catching up with Korean Listed Firms

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Jin, Xu

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Institute of Economic Research, Seoul National University
Seoul Journal of Economics, Vol.25 No.2, pp. 153-175
ProductivityCatch-upChinese firmsKorean firmsPPPICPA code
In this paper, we measured the total factor productivity ( TFP) of

all Chinese publicly listed firms by micro-level, that is, by industry

and firm levels, from 1999 to 2005. Financial data from the China

Stock Market (CSMAR) database were used and capital (K), labor ( L),

and material (M) were employed as input factors. Chinas TFP showed

some increase but remained relatively stagnant, mainly because of

the low TFP of big firms, which could potentially drive the countrys

overall productivity. We used four patterns of catch-up method (i.e.,

overtaking, convergence, slow catch-up, and reverse catch-up) developed

by Jung and Lee (2010) to classify the catch-up patterns

present in Chinese and Korean manufacturing industries. Two labor

input methods, man hour and wage, were adopted for this purpose.

The overall TFP catch-up level depended on the different labor input

methods. Using man hour as labor input, no catch-up occurred in

the overall industry level. Only slow catch-up and reverse catch-up

manifested, indicating a huge gap between the overall industry TFPs

of the two countries. Meanwhile, using wage as labor input, all of the

four catch-up patterns occurred. The apparel industry particularly

showed an overtaking, and four industries, namely, electrical machinery,

textile mill products, instruments, and petroleum and coal

products, showed a convergence pattern. The catch-up level of

Chinese manufacturing firms approached that of Korean firms when

wage was used as labor input.
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