Industrial productivity in China: the case of the food industry in Guangdong Province

Abstract

This study presents empirical evidence on the effects of incentives on industrial productivity in China’s food industry. Data covering the 1990‐1996 period were collected from 30 food enterprises in Guangdong Province. The empirical results support the use of bonus schemes to motivate enterprises to achieve higher levels of productivity. Moreover, the study indicates an important variable affecting productivity: the proportion of temporary workers in the total labour force. It was found that flexibility in the use of temporary workers could produce a positive effect on enterprise productivity. This finding strongly supports the need for flexibility in employment policies. When compared to state‐owned and collective‐owned enterprises, their counterparts, e.g. foreign ventures and joint‐stock enterprises, were relatively more efficient in production.