Search Results (12)

The Solow residual method, traditionally pivotal for calculating total factor productivity (TFP), is typically not applied to green TFP calculations due to its exclusion of undesired outputs. Diverging from traditional approaches and other frontier methodologies such as Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA), this paper integrates undesired outputs and three types of spatial spillover effects into the conventional Solow framework, thereby creating a new spatiotemporal econometric Solow residual method (STE-SRM). Utilizing this novel method, the study computes the industrial green TFPs for 280 Chinese cities from 2003 to 2019, recalculates these TFPs using DEA-SBM and Bayesian SFA for the same cities and periods, and assesses the accuracy of the STE-SRM-derived TFPs through comparative analysis. Additionally, the paper explores the statistical properties of China’s urban industrial green TFPs as derived from the STE-SRM, employing Dagum’s Gini coefficient and spatial convergence analyses. The findings first indicate that by incorporating undesired outputs and spatial spillover into the Solow residual method, green TFPs are computable in alignment with the traditional Solow logic, although the allocation of per capita inputs and undesired outputs hinges on selecting the optimal empirical production function. Second, China’s urban industrial green TFPs, calculated using the STE-SRM with the spatial Durbin model with mixed effects as the optimal model, show that cities like Huangshan, Fangchenggang, and Sanya have notably higher TFPs, whereas Jincheng, Datong, and Taiyuan display lower TFPs. Third, comparisons of China’s urban industrial green TFP calculations reveal that those derived from the STE-SRM demonstrate broader but more concentrated results, while Bayesian SFA results are narrower and less concentrated, and DEA-SBM findings sit between these extremes. Fourth, the study highlights significant spatial heterogeneity in China’s urban industrial green TFPs across different regions—eastern, central, western, and northeast China—with evident sigma convergence across the urban landscape, though absolute beta convergence is significant only in a limited subset of cities and time periods. Full article

In this work, we develop a trade model that explains the pattern of trade between countries based on differences in total factor productivity (TFP) while also accounting for differences in relative factor endowments. The novelty stems from the introduction of production functions derived by combining the Ricardian and Heckscher–Ohlin–Samuelson (H-O-S) theories, with TFP differences serving as the basis of comparative advantage. To this end, a testable hypothesis is derived. For the empirical measurement of the TFP in each industry and country, a constant elasticity of substitution (CES)-type production function was employed, and the TFP was calculated as the Solow residual from the production function’s fixed term. To offer a better understanding, the model was tested for the bilateral trade between Germany and Russia, and Germany and the Czech Republic. It was found that TFP differences can be used as a basis for explaining comparative advantages and, consequently, the bilateral pattern of trade between two countries. Full article

Calculating China’s industrial total factor productivity (TFP) at the prefectural level comprehensively and accurately is not only an inevitable requirement for China’s industrialization to enter the new development stage of “improving quality and efficiency”, but also a practical need for TFP improvement at the industrial level. Based on the improved Solow residual method with the general nesting spatial model embedded, this paper comprehensively calculated the industrial TFPs of 280 prefectural cities in China from 2003 to 2019, and undertook a detailed analysis of the spatiotemporal evolution law of the calculation results through Dagum’s Gini coefficient and kernel density estimation. Three main conclusions have been drawn in this paper. First, there is an apparent spatial difference among the industrial TFPs of the prefectural cities in China. It is the poorest and has an evident declining trend in northeast China, and best in eastern China, while the development of central and western China is between east and northeast China. Second, the spatial difference level of industrial TFPs of the prefectural cities in China shows a general development trend of firstly falling and then rising. Comparatively speaking, the contribution of intra-group differences is low, while the contribution of inter-group and the intensity of trans-variation are high. Third, the spatiotemporal evolution of China’s industrial TFPs at the prefectural level has the following characteristics: the overall distribution curve moves firstly towards the right and then left, the kernel density at the peak point continuously declines, the distribution ranges are firstly widening and then narrowing, and the tails of the distribution curve are constantly extending. Meanwhile, the distribution figures of the kernel density estimation in different regions show apparent heterogeneity. Full article

Achieving sustainable development has become the consensus of the development of human society, but many of the cities in underdeveloped resource-rich areas (UDRRAs) are sacrificing natural resources and the environment for local economic growth, which hinders the regional sustainable development. This paper uses the Solow residual method to calculate the total factor resource efficiency (TFRE) of 114 resource-based cities to assess the extent to which these cities trade resources and environment for development and identifies 59 cities in UDRRAs. The results of the study are as follows: a. Cities in UDRRAs are mainly distributed in the central and western regions and in ecologically fragile areas. b. The contribution rate of the TFRE to the economic growth of cities in UDRRAs is only 19.30%, while the contribution rate of the factor input is as high as 80.70%, and there is a phenomenon of the “resource curse” at the urban level. c. The carbon dioxide input contributed the most to the economic growth of cities in UDRRAs, accounting for 52.26%. d. The problems faced by the different types of cities in UDRRAs are quite different, especially the declining cities in UDRRAs urgently need to formulate sustainable development paths. Finally, we put forward some reference opinions on the sustainable development path of cities in UDRRAs. Full article

This paper focuses on the total factor productivity (TFP) and high-quality economic development in China by examining 11 Chinese provinces and cities in the Yangtze River Economic Belt from 2007 to 2018. We use the Solow residual method to calculate the TFP growth rate of the 11 provinces and cities. Based on the panel data, we have analyzed the influencing factors of TFP theoretically and empirically from the overall region and upstream region, and midstream region and downstream region, respectively. The regression results show that: (1) The whole characteristics generally show the TFP growth trend of the upstream region, midstream region and downstream region are consistent with that of the overall region, and the growth rate of TFP slows down gradually. Meanwhile the differences in TFP growth between the upstream region, midstream region and downstream region show an increase at first and then a decrease. (2) Regarding the influencing factors, there are differences in the direction and extent of the impact of each factor such as the level of openness, R&D investment, industrial structure, government expenditure and human capital on the TFP of the overall region, upstream region, midstream region and downstream region. (3) Based on the results of the theoretical and empirical analysis, we have proposed a series of measures for the sustainable high-quality development of the Yangtze River Economic Belt. Full article

A common conclusion in the literature is that both corruption and taxation hamper economic growth. It is also plausible that both affect total factor productivity, which, by the famous Solow residual, is a vital driver of economic progress. Moreover, corruption and tax burden are supposed to be intertwined. This paper focuses on the supposedly linked effects of corruption and tax burden on total factor productivity. The empirical study uses panel data from 90 countries for the time span of 1996–2014. The results show that both corruption and tax burden deteriorate total factor productivity, but that an increase in tax burden mitigates the negative effect of corruption. Full article

The neoclassical mainstream theory of economic growth does not care about the First and the Second Law of Thermodynamics. It usually considers only capital and labor as the factors that produce the wealth of modern industrial economies. If energy is taken into account as a factor of production, its economic weight, that is its output elasticity, is assigned a meager magnitude of roughly 5 percent, according to the neoclassical cost-share theorem. Because of that, neoclassical economics has the problems of the “Solow Residual”, which is the big difference between observed and computed economic growth, and of the failure to explain the economic recessions since World War 2 by the variations of the production factors. Having recalled these problems, we point out that technological constraints on factor combinations have been overlooked in the derivation of the cost-share theorem. Biophysical analyses of economic growth that disregard this theorem and mend the neoclassical deficiencies are sketched. They show that energy’s output elasticity is much larger than its cost share and elucidate the existence of bidirectional causality between energy conversion and economic growth. This helps to understand how economic crises have been triggered and overcome by supply-side and demand-side actions. Human creativity changes the state of economic systems. We discuss the challenges to it by the risks from politics and markets in conjunction with energy sources and technologies, and by the constraints that the emissions of particles and heat from entropy production impose on industrial growth in the biosphere. Full article

Total factor productivity (TFP) is of critical importance to the sustainable development of construction industry. This paper presents an analysis on the impact of migrant workers on TFP in Chinese construction sector. Interestingly, Solow Residual Approach is applied to conduct the analysis through comparing two scenarios, namely the scenario without considering migrant workers (Scenario A) and the scenario with including migrant workers (Scenario B). The data are collected from the China Statistical Yearbook on Construction and Chinese Annual Report on Migrant Workers for the period of 2008–2015. The results indicate that migrant workers have a significant impact on TFP, during the surveyed period they improved TFP by 10.42% in total and promoted the annual average TFP growth by 0.96%. Hence, it can be seen that the impact of migrant workers on TFP is very significant, whilst the main reason for such impact is believed to be the improvement of migrant workers’ quality obtained mainly throughout learning by doing. Full article

The main contribution of this article is to examine the productivity spillover effects from India’s inward foreign direct investment (FDI), controlling for trade, in the framework of the cointegrated vector autoregression (CVAR). For this purpose, using the Solow residual approach the aggregate total factor productivity (TFP) in India is estimated to measure FDI-induced spillovers. The results show that the inflow of FDI to India indeed improves TFP growth through positive spillover effects. We also find that trade appears to have a detrimental effect on TFP growth in India. Full article

As the largest energy consumer and carbon emitter, China has made substantial efforts to improve energy efficiency to save energy, while the energy rebound effect mitigates its effectiveness. This paper is based on the logical relationship among capital input, technical change, economic growth, and energy consumption, adapting an alternative estimation model to estimate the energy rebound effect for the construction industry in China. Empirical results reveal that the average energy rebound effect for the construction industry in China was about 59.5% during the period of 1990–2014. It is indicated that the energy rebound effect does exist in China’s construction industry and it presents a fluctuating declining trend. This indicates that approximately half of the potential energy saving by technical change is achieved. It could be concluded that proper energy pricing reforms and energy taxes should be implemented to promote sustainable development in the construction industry for China’s government. Full article

Development of energy policy is often informed by economic considerations via aggregate production functions (APFs). We identify a theory-to-policy process involving APFs comprised of six steps: (1) selecting a theoretical energy-economy framework; (2) formulating modeling approaches; (3) econometrically fitting an APF to historical economic and energy data; (4) comparing and evaluating modeling approaches; (5) interpreting the economy; and (6) formulating energy and economic policy. We find that choices made in Steps 1–4 can lead to very different interpretations of the economy (Step 5) and policies (Step 6). To investigate these effects, we use empirical data (Portugal and UK) and the Constant Elasticity of Substitution (CES) APF to evaluate four modeling choices: (a) rejecting (or not) the cost-share principle; (b) including (or not) energy; (c) quality-adjusting (or not) factors of production; and (d) CES nesting structure. Thereafter, we discuss two revealing examples for which different upstream modeling choices lead to very different policies. In the first example, the (kl)e nesting structure implies significant investment in energy, while other nesting structures suggest otherwise. In the second example, unadjusted factors of production suggest balanced investment in labor and energy, while quality-adjusting suggests significant investment in labor over energy. Divergent outcomes provide cautionary tales for policymakers: greater understanding of upstream modeling choices and their downstream implications is needed. Full article

This paper models the firm’s production process as a system of simultaneous technologies for desirable and undesirable outputs. Desirable outputs are produced by transforming inputs via the conventional transformation function, whereas (consistent with the material balance condition) undesirable outputs are by-produced via the so-called “residual generation technology”. By separating the production of undesirable outputs from that of desirable outputs, not only do we ensure that undesirable outputs are not modeled as inputs and thus satisfy costly disposability, but we are also able to differentiate between the traditional (desirable-output-oriented) technical productivity and the undesirable-output-oriented environmental, or so-called “green”, productivity. To measure the latter, we derive a Solow-type Divisia environmental productivity index which, unlike conventional productivity indices, allows crediting the ceteris paribus reduction in undesirable outputs. Our index also provides a meaningful way to decompose environmental productivity into environmental technological and efficiency changes. Full article