MEASURING THE TECHNOLOGICAL LEADERSHIP OF INTERNATIONAL JOINT VENTURES IN A TRANSFORMING ECONOMY

Technical efficiency is introduced as an objective criterion for measu ring the performance of international joint ventures in China. By usin g the technique of stochastic production frontier, we compute the esti mates of time-invariant and time-varying technical efficiency in four major manufacturing industries in Shanghai. We show that international joint ventures are in general more technically efficient than domesti c firms. In addition, the efficiency gaps between the international jo int ventures and domestic firms in the industries of textile, machiner y and equipment, and electronics and telecommunications equipment ave widening in our sample period although the industrial reforms and acti ve technology policies have improved the productivity of domestic firm s. However, in the clothing industry, the technical efficiency of dome stic firms, especially state-owned firms, is comparable to the efficie ncy leader, international joint ventures. These results are useful to assess the competitive advantages of international joint ventures in t he People's Republic of China. (C) 1997 Elsevier Science Inc.