HKEA Biennial Conference 2008 on
“Globalization and Economic Stability”
The HKBU session:
Productive Efficiency, Technological Progress and Innovation in China
Presenter 1:
WAN Guanghua, Asian Development Bank
Title:
China's Regional Inequality in Innovation Capability, 1995-2004
Abstract:
Relying on a recently-developed decomposition framework, this paper explores spatial distribution of innovation capability in China. It is found that at the regional level, China’s inequality in innovation capability increased from 1995 to 2004. At the provincial level, the inequality decreased from1995 to 2000, but increased from 2000 to 2004. Location, industrialization and urbanization, human capital, and openness (foreign direct investment) are significant contributors to the inequality in innovation capability. Unbalanced development in high-tech parks exerts a growing explanatory power in driving innovation disparity, which implies that institutional factor plays a direct role.
Presenter 2: CHENG Yuk-shing, Hong Kong Baptist University
Title:
Technological Change, Technological Catch-up and Capital deepening –
Regional Disparities of Industrial Productivity Growth in China
Abstract:
This paper aims to improve our understanding of China’s inter-regional disparity in economic development by employing new quantitative techniques to study the industrial sector of China.
Our study is motivated by both methodological and empirical considerations.
Firstly, many previous studies of China’s inter-regional income disparity apply convergence regressions that have been used for cross-country analysis (notably those proposed by Barro (1992, JPE) and Mankiw, Romer and Weil (1992, QJE)).
However, recent criticisms on the methodology have given rise to new quantitative techniques that enable us to better identify the patterns of change in the (cross-country or interregional) income distribution over time.
One line of investigation has been proposed by Kumar and Russell (2002, American Economic Review), who extend the framework of Färe (1994, American Economic Review) to decompose the labor productivity into technical change, technological catch-up and capital deepening.
This method will be used in our study.
Secondly, most previous studies of China’s inter-regional disparity focus on the output of the productivity of all economic sectors in aggregate (as measured by the GDP or per capita GDP).
However, different economic sectors could have different productivity growth and thus have different impacts on the widening and narrowing of regional income disparity.
This paper focuses on inter-regional disparity of productivity growth in the China’s industrial sector, which has been the major engine of growth of the economy. The narrower focus could generate more precise estimation results.
Preliminary estimations based on China’s industrial data of 1993-2006 suggest that technical change has been the most important driving force of labour productivity growth and total factor productivity growth in China’s industrial sector since 1999. However, the technological catch-up element has been declining, indicating that backward provinces have not been able to catch up with those on technological frontier.
Presenter 3:
LI Sung-ko, Hong Kong Baptist University
Title:
The Partial Technical Efficiency of Inputs in China
Abstract:
There are several technical efficiency measures in the literature. All of them refer to the efficient production with less of all inputs or more of all outputs. None of them, however, consider the importance of an input or output in the technical inefficiency of the production unit. This paper applies a new concept, the partial technical efficiency, to the Chinese economy after the economic reform since 1978. This partial technical efficiency is independent of the definition of the technical efficiency measure. If the Farrell measure is used, the partial inefficiency of all inputs can be added up to the usual technical inefficiency. We study the impacts of each input or output on the technical inefficiency of each province in China. The results confirm our conjecture that labor was partially more inefficient at the beginning of the reform while partially more efficient in later years. If there is priority to improve productive efficiency in China, then the labor market should be dealt with first in the first decade after 1978 while the capital market should be reformed after. This new concept of partial efficiency can help decision makers to set their priorities when they try to eliminate inefficiency.
Resolving Economic Dilemmas in China:
Beyond QDII and QFII
May 2008
Mo Pak Hung
phmo@hkbu.edu.hk
School of Business
Hong Kong Baptist University
Abstract
Globalization has resulted in massive international flows of speculative capital. With its fragile social and financial infrastructure, China will be susceptible to the ills of the flows: periodic booms and busts with financial crises and loss of foreign reserves. In this paper, we formulate a system that can resolve some important economic dilemmas in the Chinese economy. The system can allow China to liberalize its financial sector without suffering from the potential ills and generate stable revenue to the government.
Key words: China, macro-management, financial liberalization, QDII-QFII
JEL Classification: 020, 050