Decomposition of China’s Industrial Environmental Total Factor Productivity Sources: Analysis Based on Factor Input and Pollution Treatment*

Dong Minjie 1, Li Gang 2, Liang Yongmei  2
1 China Credit Rating Co., Ltd., Beijing, China
2 The Institute of Industrial Economics, Chinese Academy of Social Sciences, Beijing, China

 
Abstract: Following slack-based inefficiency measurement method and Luenberger productivity index, this paper decomposes industrial environmental TFP index by input factors and output to estimate the sources of China’s industrial environmental TFP. Results indicate that (1) China’s industrial environmental TFP increased between 2001 and 2007 but declined in 2008 under the effect of global financial crisis; (2) input utilization productivity contributes 1/3 to industrial environmental TFP and pollution treatment productivity contributes about 2/3, which means that pollution treatment will effectively increase industrial environmental TFP; (3) capital utilization productivity contributes 1/6 to input productivity and labor utilization productivity contributes about 5/6, which means that progress of labor production technologies is an effective means to increase industrial environmental TFP; (4) COD treatment productivity contributes roughly 2/3 to pollution treatment productivity, and SO2 treatment productivity contributes about 1/3, which shows that priority on COD treatment will more effectively increase industrial environmental TFP.
Key words: industrial environmental TFP, slack-based efficiency loss measurement, Luenberger productivity inde

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