Simulation of change of production efficiency based on FDI pathidentification

Based on time-varying production function with FDI path-converged approach,this research not only identifies the regional discrepancy of technicalefficiency and scale efficiency, but also simulates the change of productionefficiency with the changes of technical efficiency and technical efficiency inChinese regions. First, the identification illustrates FDI path producesincreasing technical efficiency and avoids the diminishing marginal returns inEastern region, while both cases fail in both Middle and Western regions.Second, the transplantation of Eastern technical efficiency into Middle regionnot only succeeds in producing output growth, but also keeps the productionefficiency from decreasing. Third, the transplantation of scale efficiency onlysucceeds in producing output growth while fails in reversing the declining trendof production efficiency. ICIC International