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Efficiency Convergence in the Greater China Region
Chun Kwok LEI
Source PublicationCambridge Journal of China Studies

This study is organized to estimate the efficiency level of the economies in the Greater China region which is composed by the provincial economies in the Mainland, Hong Kong, Macau and Taiwan. Employing the stochastic frontier approach, the technical efficiency level of these economies is estimated and decomposed. In addition, panel unit root tests are also conducted to assess if stochastic convergence has been achieved. Evidences suggest that the average technical efficiency level of the Greater China region has reached 0.95. Tianjin is the most efficient economy in the sample whereas Taiwan is the most efficient external Chinese economy. The least efficient economies in the sample and on the Mainland side are Hong Kong and Beijing respectively. The inner region is found to perform slightly better than the central and coastal regions and external Chinese economies in terms of technical efficiency. For the efficiency determinants, when the capital stock per labor is a negative and significant factor to efficiency, labor productivity, service output ratio, fiscal decentralization and trade openness are found to be efficiency contributors with various magnitudes. The panel unit tests have confirmed the presence of stochastic convergence across economies in the Greater China region as well as among the provincial economies on the Mainland side, coastal and inner regions and the external Chinese economies. Nevertheless, divergence of technical efficiency with enlarged disparities is also observed for the central region. Rationalization on investment projects, structural transformation toward service-oriented productions and training and vocational training programs, meanwhile, are policies which could be implemented to enhance efficiency improvements.

KeywordStochastic Frontier Approach Technical Efficiency Stochastic Convergence
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Document TypeJournal article
CollectionFaculty of Business Administration
Corresponding AuthorChun Kwok LEI
AffiliationFaculty of Business Administration, University of Macau
First Author AffilicationFaculty of Business Administration
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Chun Kwok LEI. Efficiency Convergence in the Greater China Region[J]. Cambridge Journal of China Studies,2014,9(2):8-29.
APA Chun Kwok LEI.(2014).Efficiency Convergence in the Greater China Region.Cambridge Journal of China Studies,9(2),8-29.
MLA Chun Kwok LEI."Efficiency Convergence in the Greater China Region".Cambridge Journal of China Studies 9.2(2014):8-29.
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