Structural Reform, Technological Progress and Total Factor Productivity in Manufacturing

Abstract

Beneficial institutional environments help to improve TFP in manufacturing. However, it is unclear whether China’s structural reform has led to improvements in TFP in the manufacturing industry. In this study, Sys-GMM was employed to assess the relationships between structural reform, technological progress and manufacturing TFP using panel data from provincial-level administrative regions in China from 2010 to 2020. The results showed the following: (1) Structural reform induced a spiral-shaped upward trend of TFP by affecting the technological progress levels of enterprises in China, which was also enhanced by improvements in regional technology levels. (2) The impact of market-oriented reform on industrial TFP was similar to that of entire structural reform; however, innovation environments did not significantly impact industrial TFP, technological progress had no regulatory effect and although the reform and the supply of public services could significantly promote improvements in industrial TFP, technological progress also exhibited no significant regulatory effect on these improvements. (3) The flow of technology and labor significantly, positively correlated with industrial TFP, while resource idleness had a salient inhibitory effect. In addition, enhancement of the disclosed comparative advantage, as well as further opening and expansion of operation scales of the manufacturing industry, could improve industrial TFP even more.