Do Chinese Industry Spur Innovation to Embrace the Challenges of the Current Technological Revolution: Data Envelopment Approach

Abstract

Abstract The capacity base of the manufacturing sector plays a pivotal role in the process of wealth creation and economic growth of any country. The industrial innovative performance of an economy depends on the rigorous application of new ideas, methods of production, and modern techniques. This study uses the Malmquist productivity index of Data Envelopment Analysis (DEA), and the generalized ordinal model to investigate the actual innovation growth of China’s industrial enterprises. It also analyses the possibilities of the low innovative industries under study transforming into high innovative industries. The findings highlight that, although China’s industrial enterprises above high designated are on average experiencing a negative growth rate in terms of technical progress, yet they have spurred innovation with an average growth of 7% in total factor productivity. It concludes that there is a general need for the authority concern to lay more emphasis on reducing technical inefficiency, thereby improving technological innovation level and subsequent increase in overall efficiency scale.