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Why has China Grown So Fast? The Role of Physical and Human Capital Formation

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  • Sai Ding
  • John Knight

Abstract

The paper estimates cross-province growth regressions for China over the period of economic reform.� It first addresses the problem of model uncertainty by adopting two approaches to model selection, Bayesian Model Averaging and the automated General-to-Specific approach, to consider a wide range of candidate predictors of growth in China.� The first-stage model selection results identify a role for conditional convergence, physical and human capital formation, population growth, degree of openness, and institutional change.� Starting from this baseline equation, the growth impact of physical and human capital is examined in some detail using panel data system GMM.� For instance, 'investment in innovation', foreign direct investment, and private investment are found to be particularly important.� Secondary school enrolment contributes to growth, and higher education enrolment even more so.� Finally, some illustrative counterfactual predictions are conducted to answer the question: why has China, as a whole, and indeed all its provinces, grown so fast?

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 73 (2011)
Issue (Month): 2 (04)
Pages: 141-174

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Handle: RePEc:bla:obuest:v:73:y:2011:i:2:p:141-174

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