Productivity and organization in China's rural industries: A stochastic frontier analysis

We use a stochastic production frontier approach to examine the technical efficiency of Chinese township and village enterprises (TVEs) and variations in that efficiency. Our data cover enterprises in 10 provinces in the years 1984 to 1989. We find that the average technical efficiency level of the sampled TVEs resembles that of industrial enterprises in other developing countries and that enterprises owned by township and village governments are more efficient than enterprises under private ownership. Our analysis controls for, and provides interesting results regarding, productivity differentials by province and the effects of access to loans and wage premia. (C) 1997 Academic Press.