THE EFFICIENCY IMPACT OF THE CHINESE INDUSTRIAL REFORMS IN THE 1980S

A stochastic frontier production function is used to estimate the effe ct of partial and gradual reforms in the 1980's in each of seven state -owned manufacturing industries. Reform-induced gains in technical eff iciency were significant in all sample industries although not always substantial enough to motivate industry-wide productivity growth. The bonus system had speedy and impressive efficiency effects, but there i s no consistent evidence on the effectiveness of other reform measures , including greater output autonomy, partial exposure to market influe nces, and the possibility of dismissals for malfeasance. Equalization of marginal factor returns across firms was observed in some industrie s, which may be considered as evidence of improved allocative efficien cy in response to the reforms. (C) 1996 Academic Press, Inc.