Sources of production inefficiency and productivity growth in China: A global data envelopment analysis

a r t i c l e i n f o The current mode of production in China is extensive and inefficient and has caused great stress on both resources and the environment. This paper focuses on analyzing the sources of production inefficiency and productivity growth in China. Here, a developed slacks-based measure is utilized to decompose production inefficiency into three components: input inefficiency, economic output inefficiency, and environmental inefficiency. Furthermore, by applying a method based on global data envelopment analysis, we take a further step to analyze the key factors responsible for the change of environmental productivity during 2003–2011 from the point of view of technical progress, productive scale, and management level. The results show that, redundancy in energy and labor inputs, and excessive emission of sulfur dioxide, chemical oxygen demand, and ammonia nitrogen, are the main sources of production inefficiency in China. During the sample period, the efficiency in all inputs and environmental emissions has improved (except for capital input efficiency, which had a decreasing trend). Further analysis shows that the overall environmental productivity in China has begun to follow an ascending path. Technical progress is the most powerful contributor to China's productivity growth, while the decreases in scale and management efficiency are the two main obstacles preventing productivity improvement. In recent decades, China's national economy has been steadily growing at a remarkable speed. However, this rapid development has also had high cost in terms of resources and environment. According to the statistics, China's gross domestic product (GDP) in 2010 accounted for 8.6% of global economic output, while China has the largest population in the world and its energy consumption accounted for 20.3% of global level. Besides the problem of high resource consumption, the challenges associated with expansion of environmental pollution are also very severe in China and tended to worsen in recent years. In 2010, the chemical oxygen demand (COD) and sulfur dioxide (SO 2) emissions in China were as high as 12.38 and 21.85 million tons, respectively. The air pollu-tions in many big cities became more serious in 2012 and 2013 1. It is reported that 90% of the groundwater in China has been polluted to varying degrees, and as much as 60% of all underground water is classified as undrinkable shallow groundwater 2 2See Obviously, China's productivity is at a relatively low level, and its current economic growth model with extensive and inefficient resource consumptions …