Estimation of the regional technical efficiency and total factor productivity based on the agglomeration effect

Agglomeration effects become increasingly prominent factor in promoting technical efficiency. The paper used stochastic frontier analysis (SFA) to estimate the technical efficiency in considering agglomeration effects, and then used total factor productivity growth accounting formula to decomposite total factor productivity. The conclusion shows that spatial agglomeration has significant impact on technical efficiency. Take agglomeration into account, eastern regions have improved, and central and western regions have lower technical efficiency. Total factor productivity growths in three regions are quite different. The western regions have the most dramatic changes; eastern regions maintain stable after 2002; and the central region are stable in the whole period.