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Total factor productivity growth and technological change in the telecommunications industry

  • * Corresponding author: Xuchen Lin

    * Corresponding author: Xuchen Lin 
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  • The fast growing telecommunications industry in China has been experiencing dramatic technological change and substantial productivity growth. The actual productivity growth pattern in the sector, however, need to be empirically examined. In this paper, using input and output data at the provincial level, we employ DEA-based Malmquist productivity index to estimate productivity change, technological change and relative efficiency change in China's telecommunications industry for the period spanning the years from 2011 to 2015. The results show that based on our sample, the productivity improved by 22.9% per annum, which was exclusively due to an average of 25.5% technological progress in the industry production function, while the average efficiency change is slightly negative. Our results also indicate that regions with relatively low levels of telecommunications (and economic) development have a greater chance and ability of enhancing telecommunications productivity growth through technological catch-up. In addition, we find that the industry experienced significantly higher productivity growth and technological progress in the later sample period between 2013 and 2015 than in the early period between 2011 and 2013.

    Mathematics Subject Classification: Primary: 90B30, 62P20; Secondary: 91B38.

    Citation:

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  • Figure 1.  Malmquist TFP index trend versus technological change and efficiency change during 2011 to 2015

    Table 1.  Operating environments of 31 DMUs in 2015

    DMUGRP
    (billion yuan)
    Population
    (million)
    Per capita GRP(yuan)Pr1Pr2Pr3
    Eastern region
    Beijing230121.710600936.2181.776.5
    Tianjin165415.57617822.288.563
    Liaoning286743.813205423.797.962.2
    Shanghai251224.211572333129.773.1
    Jiangsu701279.832296824.7100.255.5
    Zhejiang428955.419754326.6131.565.3
    Fujian259838.411966823.2108.269.6
    Shandong630098.529020011.492.348.9
    Guangdong7281108.533538725.9133.572.4
    Hainan3709.11705618.898.251.6
    Whole region371854957515724.5116.263.8
    Central region
    Hebei298174.313729213.282.650.5
    Shanxi127736.65880512.188.554.2
    Jilin140627.56477720.891.247.7
    Heilongjiang150838.16947815.687.444.5
    Anhui220161.41013621268.239.4
    Jiangxi167245.77703312.566.438.7
    Henan370094.817043810.779.539.2
    Hubei295558.513611314.977.446.8
    Hunan289067.813312911.669.239.9
    Whole region2059050540790147945
    Western region
    Inner Mongolia178325.18213512.994.750.3
    Guangxi168048773989.27542.8
    Chongqing157230.27239618.690.848.3
    Sichuan30058213843016.582.940
    Guizhou105035.3483778.983.338.4
    Yunnan136247.462732878.937.4
    Tibet1033.2472810.882.944.6
    Shanxi127736.65880512.188.554.2
    Gansu679263127712.58138.8
    Qinghai2425.91113317.787.954.5
    Ningxia2916.71341212.695.349.3
    Xinjiang93223.64295221.28654.9
    Whole region139763703777013.485.646.1
    Whole country7175113705238917.193.551.4
    Note: DMU = Decision-making unit, GRP = Gross regional product, Pr1 = Fixed-line penetration rate(per 100 persons), Pr2 = Mobile penetration rate(per 100 persons), Pr3 = Internet penetration rate(%).
    Source: China Statistical Yearbook 2016.
     | Show Table
    DownLoad: CSV

    Table 2.  Descriptive statistics of the input and output variables, 2011-2015 (n = 31)

    Telecom revenue(million)Labour (person) Cap 1Cap 2Cap 3Cap 4
    2011
    Mean37825487763909455154131400955366
    Median30775434883780324331751215444740
    S.D.30489327072540585031841042439246
    Minimum23861090506423454012702300
    Maximum1617161523841162101264434847815190767
    2012
    Mean41879491254772035081221411259363
    Median34519435794410604114771190249244
    S.D.3325432550325007497595984042026
    Minimum33011090631453454013363420
    Maximum1766381522931567817258763643606203926
    2013
    Mean50668496005630234115951325463406
    Median42938442455056333422371025552558
    S.D.4079832412372801301962913543518
    Minimum39651308740471662013373930
    Maximum2176091513771735687144639440865211481
    2014
    Mean58511504936649203155951306966137
    Median5206644681584039224364890758580
    S.D.47187333874634812816641353444984
    Minimum4543163588892143105363930
    Maximum2493541551752081008133744974018214181
    2015
    Mean7531150079802043268276853070371
    Median6994944354656959207480720458941
    S.D.6086332599570614209756601747591
    Minimum53791617115695128701154480
    Maximum315003150432251154385152028447220258
    Note: Cap 1 = the length of optical cable lines (in kilometres); Cap 2 = the capacity of long-distance telephone exchanges(in circuits); Cap 3 = the capacity of local office telephone exchanges(in thousand exchange lines); Cap 4 = the capacity of mobile telephone exchanges(in thousand subscribers).
     | Show Table
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    Table 3.  Malmquist productivity change index

    DMUAnnual averages (2011-2015)
    EffChTechChPEffChSEffChTFPCh
    Eastern region
    Beijing1.0001.1101.0001.0001.110
    Tianjin0.9191.1580.9860.9321.064
    Liaoning0.8721.1750.8711.0011.025
    Shanghai0.9981.1370.9990.9991.134
    Jiangsu1.0031.2461.0001.0031.250
    Zhejian1.0001.2181.0001.0001.218
    Fujian1.0191.2891.0171.0021.314
    Shandong0.9351.2350.9360.9991.155
    Guangdong1.0001.2091.0001.0001.209
    Hainan1.0161.3091.0001.0161.330
    Central region
    Hebei0.9211.2210.9240.9961.124
    Shanxi0.9291.2720.9310.9981.182
    Jilin0.9461.2600.9520.9941.191
    Heilongjiang0.8881.1770.8990.9881.045
    Anhui1.0401.3601.0680.9741.415
    Jiangxi0.9931.2340.9921.0011.225
    Henan0.9871.2891.0140.9731.272
    Hubei0.9961.2961.0030.9931.291
    Hunan0.9581.2660.9571.0011.213
    Western region
    Inner Mongolia0.9141.3490.9300.9831.232
    Guangxi0.9721.1370.9691.0031.105
    Chongqing1.0171.3371.0151.0021.361
    Sichuan0.9631.3711.0000.9631.320
    Guizhou1.0611.1661.0601.0011.237
    Yunnan1.0091.2741.0091.0011.285
    Tibet1.0001.3511.0001.0001.351
    Shanxi1.0161.2681.0220.9941.288
    Gansu1.0431.2911.0600.9841.347
    Qinghai1.0431.4391.0001.0431.501
    Ningxia1.0061.2591.0001.0061.266
    Xinjiang0.9321.2750.9470.9831.188
    Eastern region0.9751.2070.9800.9951.177
    Central region0.9611.2630.9700.9911.214
    Western region0.9971.2911.0000.9971.287
    All regions0.9791.2550.9850.9941.229
     | Show Table
    DownLoad: CSV

    Table 4.  Malmquist TFP index summary of annual averages during 2011 to 2015

    YearEffChTechChPEffChSEffChTFPCh
    20121.0061.0681.0061.0001.074
    20130.9161.2930.9340.9811.185
    20141.0171.2931.0071.0101.315
    20150.9821.3900.9930.9881.364
     | Show Table
    DownLoad: CSV

    Table 5.  Comparison of the indexes between the period of 2011– 2013 and the period of 2013–2015

    EffChTechChPEffChSEffChTFPCh
    2011-20130.9601.1750.9700.9901.128
    2013-20150.9991.3401.0000.9991.339
     | Show Table
    DownLoad: CSV
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