China has implemented its market oriented reform for almost 30 years. The key measurement for reforming achievements is how much China has enhanced its social wealth production, while a more direct measurement for the successfulness of the reform is the improvement of economic efficiency which tests the perfection of market mechanism. Focusing on two typical periods-pre-reform period(1952-1978)and reform period(1979-1999).The study on relation of Economic Reform and Efficiency Improvement is conducted.
Average production function and stochastic frontier production function in the forms of both Cobb-Douglas and Restricted Translog were estimated by using Ordinary Least Square(OLS) method and Maximum Likelihood(ML)techniques. By decomposing the error term into two components, one with normal distribution and the other with truncated normal distribution, the technical efficiency was estimated. Furthermore, the growth of China's economy was accounted. Finally, the relation of Economic Reform and Efficiency Improvement is fingered out.