1. The purpose of this paper is to compare the competitiveness between Korean and Chinese industries: technical efficiencies and productivities without and with environmental constraints, and shadow prices of SOx. The technical efficiencies without an ...
1. The purpose of this paper is to compare the competitiveness between Korean and Chinese industries: technical efficiencies and productivities without and with environmental constraints, and shadow prices of SOx. The technical efficiencies without and with environmental constraints in Chinese manufacturing industries are higher than those in Korean manufacturing industries. Most of Chinese industries dominate Korean industries in levels of technical efficiency. In terms of productivity changes despising environmental constraints, the rates of annual growth in Korean and Chinese industries show 1.13 percent and 2.73% respectively. But based on productivity changes considering environmental constraints, Korean industry shows 2.41 percent, higher rate of growth than 1.58 percent of Chinese industry. In the estimation of shadow prices of SOx, the reduction of an additional unit of SOx in the Korean industry needs a decrease of 1.473 unit of output, while the shadow price of SOx in Chinese industry is 0.0049, close to zero, implying that additional cost of pollution reduction is really tiny. The addition of environment constraints clearly made the competitiveness of industries distinctive in two countries.
Key Words: Directional Distance Function, Industrial Competitiveness, Technical Efficiency, Productivity Change, Environmental constraints, Shadow prices of SO2
2. In this paper, using a input distance function we compare the competitiveness between Korean and Chinese manufacturing industries: technical efficiency, return to scale, shadow prices of capital and SO2. The estimate of technical efficiency in the Korean industries is, on average, 0.74, implying that costs can be reduced by up to 26 percent; Chinese industries show a higher technical efficiency by about 9 percent. Compared with Chinese industries, the return to scale in Korean industries is greater, but the number of industries with higher return is less. The shadow price of capital in Chinese industries is estimated to be about half of Korean industries. The estimate of shadow price of SO2 indicates that reducing an additional unit of SO2, on average, requires a decrease in 0.17 units of output, while the shadow price of SO2 is estimated to be zero in Chinese industries. These findings suggest that Chinese industries have an advantage over Korean industries in price competitiveness.
Key Words: Input distance function, Competitiveness and Korean/Chinese manufacturing industries, Technical efficiency, Return to scale, Shadow capital price, SO2 shadow price