Policy Reform and Productivity Change in Chinese Agriculture: A Distance Function Approach

Agricultural policy reform has been an important source of change in the Chinese agricultural sector. The reforms led to productivity growth and helped China in pursuing its self-sufficiency goal especially in the grain sector. To analyse whether observable productivity growth stems from technologically induced components, or from the market induced parts, a multi-input-multi-output model is derived using an econometric distance function framework. A decomposition allows to distinguish allocative effects, scale effects, technological change, and technical efficiency change. Data on farms in Zhejiang from 1986 to 1999 are used to analyse the impact of policy reform.