25%, respectively. Among the 28 subindustries of manufacturing, the value of environmental Seliciclib CDK2 TFP of manufacture of communication equipment, computers and other electronic equipment (17.57%) is the highest, followed by manufacture of measuring instruments and machinery for cultural activity and office work (14.63%). Pure technical progress makes the greatest contribution to the former’s environmental TFP, while scale efficiency change makes the greatest contribution to the latter’s environmental TFP. The environmental TFP of some industries is very low, less than 2%, such as manufacture of leather, fur, feather and related products, manufacture of paper and paper products, processing of petroleum, coking, processing of nuclear fuel, and manufacture of chemical fibers, most of which are pollution-intensive industries.
Because of the negative value of scale efficiency change and low value of pure efficiency change, the mean value of environmental TFP of production and supply of electricity, gas, and water is much lower than that of manufacturing and mining.4. Determinants of Environmental Efficiency and Environmental TFP4.1. Data What determines the environmental efficiency and environmental TFP of China’s industry? Loko and Diouf fully analysed the determinants of productivity growth [25]. Based on the recent literature and context of China’s economic transformation, the most important determinants of environmental efficiency and environmental TFP are as follows.4.1.1. Capital Structure (X1) Capital structure is denoted by the proportion of value-added of foreign direct investment (FDI) enterprises in the added value of industrial enterprises above designated size.
China has received significant FDI inflows for the past three decades, and FDI has been an important factor influencing industrial efficiency and productivity growth. Zhou et al. pointed out that domestic firms in industries which have more FDI or have a longer history of FDI tend to have lower productivity [26]. Estimating the influence of FDI on efficiency and TFP of China’s industry under resources and environment constraint is actually a test of ��pollution haven hypothesis�� [27].4.1.2. Endowment Structure (X2) Endowment structure is denoted by capital-labor ratio. Capital and labor are sources of comparative advantage for most industries.
The rising of capital-labor ratio means capital deepening which is an important determinant of industrial efficiency and productivity growth. Empirical studies show that the elasticity of substitution between capital and labor is larger than the one in developed countries but smaller than that in Carfilzomib developing countries [28]. There are, however, several aspects of China’s industrial strategy that have partially offset the trend toward capital deepening [29].