Reform and efficiency of state-owned forest enterprises in Northeast China as “social firms”
Abstract
State-owned forest enterprises (SOFEs) in northeast China have experienced past economic loss andenvironmental degradation, causing government to seek reforms. Measurement of technical efficiencyallows us to evaluate overall trends and how reforms affect production of social and environmental goods.Previous assessments have used small samples, short time periods, and viewed SOFEs as if they wereprofit-maximizers. We compared a traditional profit-maximization framework to an alternative "socialfirms" framework for SOFEs to classify inputs and outputs, and data envelopment analysis to measure theefficiency of 86 SOFEs from 2003 to 2009. We argue that the social firm framework is more appropriatefor SOFEs given their stated objectives. We found no overall trend in pure technical efficiency over timefor the social firm framework; however, there was an increase in pure technical efficiency for the profitmaximization framework, consistent with past literature. At the same time, there were decreases in scaleefficiency primarily due to higher levels of government investment. We compared groups of SOFEs thatunderwent a specific pilot forest tenure reform to those that did not, and we found no evidence to supportthat tenure reform improved technical efficiency.