This paper analyses the technical efficiency problem in Gansu Province, West China,
using firm-level cross-sectional data. Compared with previous studies, which mostly
focus on industries, this paper focuses on a geographic area instead. By applying the
stochastic frontier framework, this paper arrives at four major findings: first,
resource-based firms are more technically efficient on average than
non-resource-based firms; second, foreign investment is beneficial to the
improvement of technical efficiency; third, there is no evidence that ownership affects
the technical efficiency of firms in Gansu province; and fourth, bigger firms tend to
operate with more technical efficiency than smaller firms.