THE PRODUCTIVE EFFICIENCY OF CHINESE IRON AND STEEL FIRMS - A STOCHASTIC FRONTIER ANALYSIS

This paper applies a time-varying production frontier model to examine the productive efficiency in China's iron and steel industry, Sixty-o ne state and local firms are covered in this study, The analytical res ults show that Chinese firms on average achieved about 69-82% of their potential output during the period 1984-92. It is also found that fir m age is positively related to enterprise efficiency in the Chinese ir on and steel industry. In addition, the findings in this paper show no significant effects on efficiency of firm ownership and the economies of scale. Finally, according to this study, firms exposed to certain locations may gain from the economies of agglomeration and hence perfo rm better than the others.