The relative importance of effort, organization, and technological change in Chinese factories

Production reports from a set of Chinese factories reveal very rapid produc tivity growth from 1980 to 1991, To understand the underlying factors, the effects of work effort and labor organization are separated from the produc tivity estimates. Data analysis reveals that these two effects jointly expl ain most of the measured productivity growth during this period. This resul t suggests that (1) very substantial productivity growth can be realized fo r economies in the take-off stage even without substantial pure technologic al advancement, and (2) in reforming the Chinese state factories, there wil l have to be a more difficult second stage to confront their technological backwardness. (JEL 033, 053, P21, P27).