ASSESSING GAINS IN EFFICIENT PRODUCTION AMONG CHINA INDUSTRIAL-ENTERPRISES

This article formulates and applies an approach for measuring gains in productive efficiency among socialist enterprises in transition. Using established theory and microlevel data, the article evaluates the progress of China's industrial enterprises toward satisfying one of the principal efficiency conditions of a competitive market economy, namely, the equalization of marginal revenue factor products across enterprises. The approach and resulting measures are of direct use in evaluating critical issues of reform strategy, including China's strategy of evolutionary reform. Using panel data for 66 industrial enterprises over the period 1980-89, this article reports evidence that during 1980-89 returns to labor, capital, and materials became more equal among large and medium-sized enterprises within China's state sector. We also find a significant convergence of technical efficiency. -from Authors