Total factor productivity growth in China’s corn farming: an application of generalized productivity indicator
Abstract
Total factor productivity (TFP) growth measures usually focus on a certain direction of optimization and ignore the general setting encompassing the input and output orientations simultaneously. This paper uses the generalized Luenberger-Hicks-Moorsteen (LHM) TFP indicator which is additively complete and can be decomposed by three mutually exclusive elements. The input- and output-oriented analysis is undertaken in order to derive the generalized TFP measured. The paper uses the corn production data from 19 Chinese provinces over the period of 2004–2017. This research is important as China is the second largest corn producer in the world. The TFP growth was observed for Chinese corn farming the rate of 0.56% per year. The technological progress (0.48%) was the major source of the TFP growth, whereas the importance of the technical efficiency change (0.09%) and scale efficiency change (–0.01%) was negligible.
Keyword : corn production, total factor productivity, Luenberger-Hicks-Moorsteen indicator, data envelopment analysis, efficiency change, technological progress
How to Cite
Niu, Z., Zhang, Y., Li, T., Baležentis, T., Štreimikienė, D., & Shen, Z. (2021). Total factor productivity growth in China’s corn farming: an application of generalized productivity indicator. Journal of Business Economics and Management, 22(5), 1189-1208. https://doi.org/10.3846/jbem.2021.15105
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Blancard, S., & Hoarau, J.-F. (2011). Optimizing the new formulation of the United Nations’ human development index: An empirical view from data envelopment analysis. Economics Bulletin, 31(1), 989–1003. https://ideas.repec.org/a/ebl/ecbull/eb-10-00809.html
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Diewert, W. E., & Fox, K. J. (2014). Reference technology sets, Free Disposal Hulls and productivity decompositions. Economics Letters, 122(2), 238–242. https://doi.org/10.1016/j.econlet.2013.11.026
Diewert, W. E., & Fox, K. J. (2017). Decomposing productivity indexes into explanatory factors. European Journal of Operational Research, 256(1), 275–291. https://doi.org/10.1016/j.ejor.2016.05.043
Ely, A., Geall, S., & Song, Y. (2016). Sustainable maize production and consumption in China: Practices and politics in transition. Journal of Cleaner Production, 134, 259–268. https://doi.org/10.1016/j.jclepro.2015.12.001
Fare, R., & Primont, D. (1995). Multi-output production and duality: Theory and applications. Springer Science & Business Media. https://doi.org/10.1007/978-94-011-0651-1
General Office of the Ministry of Agriculture in China. (2010). National green prevention and control guidelines for Maize Locust. Retrieved June 12, 2019, from https://law.lawtime.cn/d676398681492.html
Hackman, S. T. (2007). Production economics: Integrating the microeconomic and engineering perspectives. Springer Science & Business Media. https://books.google.lt/books/about/Production_Economics.html?id=gXC0H_R50e4C&redir_esc=y
Ilyas, H. M. A., Safa, M., Bailey, A., Rauf, S., & Khan, A. (2020). Energy efficiency outlook of New Zealand dairy farming systems: An application of data envelopment analysis (DEA) approach. Energies, 13(1), 251. https://doi.org/10.3390/en13010251
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Key, N. (2019). Farm size and productivity growth in the United States Corn Belt. Food Policy, 84, 186–195. https://doi.org/10.1016/j.foodpol.2018.03.017
Kim, K., & Chavas, J. P. (2003). Technological change and risk management: An application to the economics of corn production. Agricultural Economics, 29(2), 125–142. https://doi.org/10.1111/j.1574-0862.2003.tb00152.x
Li, Z., & Zhang, H. (2013). Productivity growth in China’s agriculture during 1985–2010. Journal of Integrative Agriculture, 12(10), 1896–1904. https://doi.org/10.1016/S2095-3119(13)60598-5
Ma, Q., Yu, W.-T., Jiang, C.-M., Zhou, H., & Xu, Y.-G. (2012). The influences of mineral fertilization and crop sequence on sustainability of maize production in northeastern China. Agriculture, Ecosystems and Environment, 158, 110–117. https://doi.org/10.1016/j.agee.2012.05.023
Ministry of Agriculture in China. (2017). Several opinions on deepening the supply-side structural reform in agriculture. Retrieved March 24, 2020, from http://www.moa.gov.cn/govpublic/BGT/201702/t20170206_5468139.htm
Mohamed, A. A., & Nageye, A. I. (2020). Measuring the effect of land degradation and environmental changes on agricultural production in Somalia with two structural breaks. Management of Environmental Quality, 32(2), 160–174. https://doi.org/10.1108/MEQ-02-2020-0032
Nastis, S. A., Bournaris, T., & Karpouzos, D. (2019). Fuzzy data envelopment analysis of organic farms. Operational Research, 19(2), 571–584. https://doi.org/10.1007/s12351-017-0294-9
National Bureau of Statistics of China. (2020). http://www.stats.gov.cn/english/
O’Donnell, C. J. (2012). An aggregate quantity framework for measuring and decomposing productivity change. Journal of Productivity Analysis, 8(3), 255–272. https://doi.org/10.1007/s11123-012-0275-1
Popescu, V. A., Popescu, G. N., & Popescu, C. R. (2015). Competitiveness and sustainability – a modern economic approach to the industrial policy. Metalurgija, 54(2), 426–428. https://core.ac.uk/download/pdf/25564878.pdf
Shen, Z., Balezentis, T., & Ferrier, G. D. (2019). Agricultural productivity evolution in China: A generalized decomposition of the Luenberger-Hicks-Moorsteen productivity indicator. China Economic Review, 57, 101315. https://doi.org/10.1016/j.chieco.2019.101315
Shephard, R. W. (1970). Theory of cost and production functions. Princeton University Press. https://www.worldcat.org/title/theory-of-cost-and-production-functions/oclc/905862844
Skevas, T., & Cabrera, V. E. (2020). Measuring farmers’ dynamic technical and udder health management inefficiencies: The case of Wisconsin dairy farms. Journal of Dairy Science, 103(12), 12117–12127. https://doi.org/10.3168/jds.2020-18656
Song, W., Han, Z., & Deng, X. (2016). Changes in productivity, efficiency and technology of China’s crop production under rural restructuring. Journal of Rural Studies, 47(B), 563–576. https://doi.org/10.1016/j.jrurstud.2016.07.023
Stanciu, S., Virlanuta, F. O., Dinu, V., Zungun, D., & Antohi, V. M. (2019), The perception of the social economy by agricultural producers in the North-East development region of Romania. Transformations in Business & Economics, 18(2B (47B), 879–899.
State Council of the CPC Central Committee. (2004). Opinions of the Central Committee of the CPC and the State Council on the Several Policies for Promoting the Increase of Farmers’ Income. Retrieved June 11, 2021, from http://www.gov.cn/test/2006-02/22/content_207415.htm
State Council of the CPC Central Committee. (2009). Several opinions of the state council of the CPC Central Committee on promoting the stable development of agriculture and the sustainable increase of farmers’ income in 2009. Retrieved April 22, 2019, from http://www.gov.cn/gongbao/content/2009/content_1220471.htm
State Council of the CPC Central Committee. (2012). Several opinions on accelerating the advancement of agricultural science and technology innovation and continuously enhancing the supply guarantee ability of agricultural products. Retrieved June 24, 2019, from http://www.moa.gov.cn/ztzl/yhwj/zywj/201202/t20120215_2481552.htm
State Council of the CPC Central Committee. (2014a). Several opinions of the state council of the CPC Central Committee on Comprehensively deepening rural reform and accelerating agricultural modernization. Retrieved March 24, 2020, from http://www.gov.cn/gongbao/content/2014/content_2574736.htm
State Council of the CPC Central Committee. (2014b). Several opinions of the state council of the CPC Central Committee on deepening the reform in rural areas in an all round way and accelerating the development of agricultural modernization. Retrieved March 24, 2020, from http://www.gov.cn/gongbao/content/2014/content_2574736.htm
State Council of the CPC Central Committee. (2016). Several opinions of the state council of the CPC Central Committee on implementation of the new concepts on the development and acceleration of the agricultural modernization for realize of the moderate prosperity in all respects. Retrieved March 24, 2020, from http://www.moa.gov.cn/ztzl/2016zyyhwj/2016zyyhwj/201601/t20160129_5002063.htm
Tian, X., & Yu, X. (2012). The enigmas of TFP in China: A meta-analysis. China Economic Review, 23(2), 396–414. https://doi.org/10.1016/j.chieco.2012.02.007
Wang, H., Mu, Y., & Hou, L. (2017). Research on temporal and spatial evolutions of environmental costs and total factor productivity of maize production in China. Journal of Natural Resources, 32(7), 1204–1216 (in Chinese).
Wang, Q., Gao, Z., Yuan, X., Wang, J., & Wang, M. (2019). Comprehensive emergy evaluation and optimization of corn straw power generation system: A case study. Chinese Journal of Population Resources and Environment, 17(2), 135–144. https://doi.org/10.1080/10042857.2019.1610652
Xu, X., Liu, X., He, P., Johnston, A. M., Zhao, S., Qiu, S., & Zhou, W. (2015). Yield gap, indigenous nutrient supply and nutrient use efficiency for maize in China. PLoS One, 10(10), e0140767. https://doi.org/10.1371/journal.pone.0140767
Yang, Q., Chen, B., Ji, X., He, Y. F., & Chen, G. Q. (2009). Exergetic evaluation of maize-ethanol production in China. Communications in Nonlinear Science and Numerical Simulation, 14(5), 2450–2461. https://doi.org/10.1016/j.cnsns.2007.08.011
Zhang, Q., & Hu, Z. (2018). Assessment of drought during maize growing season in Northeast China. Theoretical and Applied Climatology, 133(3–4), 1315–1321. https://doi.org/10.1007/s00704-018-2469-6
Blancard, S., Boussemart, J.-P., & Leleu, H. (2011). Measuring potential gains from specialization under non-convex technologies. Journal of the Operational Research Society, 62(10), 1871–1880. https://doi.org/10.1057/jors.2010.148
Blancard, S., Boussemart, J.-P., Briec, W., & Kerstens, K. (2006). Short- and long-run credit constraints in French agriculture: A directional distance function framework using expenditure-constrained profit functions. American Journal of Agricultural Economics, 88(2), 351–364. https://doi.org/10.1111/j.1467-8276.2006.00863.x
Blancard, S., & Hoarau, J.-F. (2011). Optimizing the new formulation of the United Nations’ human development index: An empirical view from data envelopment analysis. Economics Bulletin, 31(1), 989–1003. https://ideas.repec.org/a/ebl/ecbull/eb-10-00809.html
Briec, W., & Kerstens, K. (2004). A Luenberger-Hicks-Moorsteen productivity indicator: Its relation to the Hicks-Moorsteen productivity indes and the Luenberger productivity indicator. Economic Theory, 23(4), 925–939. https://ideas.repec.org/a/spr/joecth/v23y2004i4p925-939.html
Central Committee of the Communist Party of China. (2004). No. 1 Central Document. Retrieved March 20, 2019, from http://www.gov.cn/test/2006–02/22/content_207415.htm
Central Committee of the National People’s Congress. (2005). The Decision of the Central Committee of the National People’s Congress on Abolishing the Regulation of the People’s Republic of China on Agriculture Tax. Retrieved March 12, 2019, from http://www.gov.cn/zhengce/2005-12/30/content_2602183.htm
Chambers, R. G. (2002). Exact non radial input, outputs, and productivity measurement. Economic Theory, 20, 751–65. https://doi.org/10.1007/s001990100231
Diewert, W. E., & Fox, K. J. (2014). Reference technology sets, Free Disposal Hulls and productivity decompositions. Economics Letters, 122(2), 238–242. https://doi.org/10.1016/j.econlet.2013.11.026
Diewert, W. E., & Fox, K. J. (2017). Decomposing productivity indexes into explanatory factors. European Journal of Operational Research, 256(1), 275–291. https://doi.org/10.1016/j.ejor.2016.05.043
Ely, A., Geall, S., & Song, Y. (2016). Sustainable maize production and consumption in China: Practices and politics in transition. Journal of Cleaner Production, 134, 259–268. https://doi.org/10.1016/j.jclepro.2015.12.001
Fare, R., & Primont, D. (1995). Multi-output production and duality: Theory and applications. Springer Science & Business Media. https://doi.org/10.1007/978-94-011-0651-1
General Office of the Ministry of Agriculture in China. (2010). National green prevention and control guidelines for Maize Locust. Retrieved June 12, 2019, from https://law.lawtime.cn/d676398681492.html
Hackman, S. T. (2007). Production economics: Integrating the microeconomic and engineering perspectives. Springer Science & Business Media. https://books.google.lt/books/about/Production_Economics.html?id=gXC0H_R50e4C&redir_esc=y
Ilyas, H. M. A., Safa, M., Bailey, A., Rauf, S., & Khan, A. (2020). Energy efficiency outlook of New Zealand dairy farming systems: An application of data envelopment analysis (DEA) approach. Energies, 13(1), 251. https://doi.org/10.3390/en13010251
Kerstens, K., Shen, Z., & Van de Woestyne, I. (2018). Comparing Luenberger and Luenberger-HicksMoorsteen productivity indicators: How well is total factor productivity approximated? International Journal of Production Economics, 195, 311–318. https://doi.org/10.1016/j.ijpe.2017.10.010
Key, N. (2019). Farm size and productivity growth in the United States Corn Belt. Food Policy, 84, 186–195. https://doi.org/10.1016/j.foodpol.2018.03.017
Kim, K., & Chavas, J. P. (2003). Technological change and risk management: An application to the economics of corn production. Agricultural Economics, 29(2), 125–142. https://doi.org/10.1111/j.1574-0862.2003.tb00152.x
Li, Z., & Zhang, H. (2013). Productivity growth in China’s agriculture during 1985–2010. Journal of Integrative Agriculture, 12(10), 1896–1904. https://doi.org/10.1016/S2095-3119(13)60598-5
Ma, Q., Yu, W.-T., Jiang, C.-M., Zhou, H., & Xu, Y.-G. (2012). The influences of mineral fertilization and crop sequence on sustainability of maize production in northeastern China. Agriculture, Ecosystems and Environment, 158, 110–117. https://doi.org/10.1016/j.agee.2012.05.023
Ministry of Agriculture in China. (2017). Several opinions on deepening the supply-side structural reform in agriculture. Retrieved March 24, 2020, from http://www.moa.gov.cn/govpublic/BGT/201702/t20170206_5468139.htm
Mohamed, A. A., & Nageye, A. I. (2020). Measuring the effect of land degradation and environmental changes on agricultural production in Somalia with two structural breaks. Management of Environmental Quality, 32(2), 160–174. https://doi.org/10.1108/MEQ-02-2020-0032
Nastis, S. A., Bournaris, T., & Karpouzos, D. (2019). Fuzzy data envelopment analysis of organic farms. Operational Research, 19(2), 571–584. https://doi.org/10.1007/s12351-017-0294-9
National Bureau of Statistics of China. (2020). http://www.stats.gov.cn/english/
O’Donnell, C. J. (2012). An aggregate quantity framework for measuring and decomposing productivity change. Journal of Productivity Analysis, 8(3), 255–272. https://doi.org/10.1007/s11123-012-0275-1
Popescu, V. A., Popescu, G. N., & Popescu, C. R. (2015). Competitiveness and sustainability – a modern economic approach to the industrial policy. Metalurgija, 54(2), 426–428. https://core.ac.uk/download/pdf/25564878.pdf
Shen, Z., Balezentis, T., & Ferrier, G. D. (2019). Agricultural productivity evolution in China: A generalized decomposition of the Luenberger-Hicks-Moorsteen productivity indicator. China Economic Review, 57, 101315. https://doi.org/10.1016/j.chieco.2019.101315
Shephard, R. W. (1970). Theory of cost and production functions. Princeton University Press. https://www.worldcat.org/title/theory-of-cost-and-production-functions/oclc/905862844
Skevas, T., & Cabrera, V. E. (2020). Measuring farmers’ dynamic technical and udder health management inefficiencies: The case of Wisconsin dairy farms. Journal of Dairy Science, 103(12), 12117–12127. https://doi.org/10.3168/jds.2020-18656
Song, W., Han, Z., & Deng, X. (2016). Changes in productivity, efficiency and technology of China’s crop production under rural restructuring. Journal of Rural Studies, 47(B), 563–576. https://doi.org/10.1016/j.jrurstud.2016.07.023
Stanciu, S., Virlanuta, F. O., Dinu, V., Zungun, D., & Antohi, V. M. (2019), The perception of the social economy by agricultural producers in the North-East development region of Romania. Transformations in Business & Economics, 18(2B (47B), 879–899.
State Council of the CPC Central Committee. (2004). Opinions of the Central Committee of the CPC and the State Council on the Several Policies for Promoting the Increase of Farmers’ Income. Retrieved June 11, 2021, from http://www.gov.cn/test/2006-02/22/content_207415.htm
State Council of the CPC Central Committee. (2009). Several opinions of the state council of the CPC Central Committee on promoting the stable development of agriculture and the sustainable increase of farmers’ income in 2009. Retrieved April 22, 2019, from http://www.gov.cn/gongbao/content/2009/content_1220471.htm
State Council of the CPC Central Committee. (2012). Several opinions on accelerating the advancement of agricultural science and technology innovation and continuously enhancing the supply guarantee ability of agricultural products. Retrieved June 24, 2019, from http://www.moa.gov.cn/ztzl/yhwj/zywj/201202/t20120215_2481552.htm
State Council of the CPC Central Committee. (2014a). Several opinions of the state council of the CPC Central Committee on Comprehensively deepening rural reform and accelerating agricultural modernization. Retrieved March 24, 2020, from http://www.gov.cn/gongbao/content/2014/content_2574736.htm
State Council of the CPC Central Committee. (2014b). Several opinions of the state council of the CPC Central Committee on deepening the reform in rural areas in an all round way and accelerating the development of agricultural modernization. Retrieved March 24, 2020, from http://www.gov.cn/gongbao/content/2014/content_2574736.htm
State Council of the CPC Central Committee. (2016). Several opinions of the state council of the CPC Central Committee on implementation of the new concepts on the development and acceleration of the agricultural modernization for realize of the moderate prosperity in all respects. Retrieved March 24, 2020, from http://www.moa.gov.cn/ztzl/2016zyyhwj/2016zyyhwj/201601/t20160129_5002063.htm
Tian, X., & Yu, X. (2012). The enigmas of TFP in China: A meta-analysis. China Economic Review, 23(2), 396–414. https://doi.org/10.1016/j.chieco.2012.02.007
Wang, H., Mu, Y., & Hou, L. (2017). Research on temporal and spatial evolutions of environmental costs and total factor productivity of maize production in China. Journal of Natural Resources, 32(7), 1204–1216 (in Chinese).
Wang, Q., Gao, Z., Yuan, X., Wang, J., & Wang, M. (2019). Comprehensive emergy evaluation and optimization of corn straw power generation system: A case study. Chinese Journal of Population Resources and Environment, 17(2), 135–144. https://doi.org/10.1080/10042857.2019.1610652
Xu, X., Liu, X., He, P., Johnston, A. M., Zhao, S., Qiu, S., & Zhou, W. (2015). Yield gap, indigenous nutrient supply and nutrient use efficiency for maize in China. PLoS One, 10(10), e0140767. https://doi.org/10.1371/journal.pone.0140767
Yang, Q., Chen, B., Ji, X., He, Y. F., & Chen, G. Q. (2009). Exergetic evaluation of maize-ethanol production in China. Communications in Nonlinear Science and Numerical Simulation, 14(5), 2450–2461. https://doi.org/10.1016/j.cnsns.2007.08.011
Zhang, Q., & Hu, Z. (2018). Assessment of drought during maize growing season in Northeast China. Theoretical and Applied Climatology, 133(3–4), 1315–1321. https://doi.org/10.1007/s00704-018-2469-6