Productivity Growth at the Firm Level: with Application to the Chinese Steel Mills

Abstract

This article applies a stochastic frontier approach to examine the impact of firm-specific economic and policy factors or environmental variables on productivity growth, efficiency changes, scale economies and technological progress. Three hypotheses are tested with empirical application to the Chinese steel firms. The three hypotheses are: (a) firm-specific factors affect efficiency changes only; (b) firm-specific factors have a direct impact on the production structure particularly on the production frontier; and (c) firm-specific factors influence both efficiency changes and the production technology directly. The findings from this study provide insights into the determinants of productivity and efficiency changes in the Chinese steel industry.