Efficiency, Technical Progress, and Best Practice

Based on a sample of about 600 state enterprises from 1980 to 1994, this paper investigates the productivity performance of SOEs using Data Envelopment Analysis and a Malmquist index. Our empirical results show that the average technical efficiency was low for these firms. Considerable productivity growth was found, but it was accomplished mainly through technical progress rather than through efficiency improvement. Regression analyses indicate that large SOEs were more likely to generate productivity growth than smaller ones. The best practice firms were most likely to be found among large enterprises located in the well-developed costal province. Wage incentives and education had positive impacts on productivity growth. Capacity utilization had a significant short-run effect on productivity through efficiency improvement. Journal of Economic Literature Classification Numbers: D24, P31