TECHNICAL EFFICIENCY, ECONOMIC GROWTH AND REGIONAL EQUALITY IN CHINA: A STOCHASTIC FRONTIER APPROACH

Applying the stochastic frontier approach to provincial statistics, we decompose economic growth in China during the reform period 1978-2003 into three components : technological progress (shifts in the production frontier), efficiency change (movements towards or away from the frontier) and physical capital accumulation (movements along the frontier). Then we examine the contributions of these components to growth and regional convergence. The results indicate that efficiency change dominates the first phase of the reforms and capital accumulation becomes the key factor of growth since the beginning of the 1990's, while the contribution of technological progress remains limited throughout the whole period. Among these three components, efficiency change is the only factor favorable for the regional catch-up process.