Advanced Search
MyIDEAS: Login to save this article or follow this journal

How much does investment drive economic growth in China?

Contents:

Author Info

  • Qin, Duo
  • Cagas, Marie Anne
  • Quising, Pilipinas
  • He, Xin-Hua

Abstract

Investment-driven growth has long been regarded as a key development strategy in China. This paper investigates empirically the validity of this view. Post-1990 data analyses and macroeconometric model simulations show that market demand has become a regular force in driving investment since reforms, that non-demand-driven investment growth contributes to increasing capital-output ratio far more than output growth, that government investment exerts a pivotal role in amplifying investment cycles, albeit effective in promoting employment, and that delayed and rising consumption from current investment surge can help sustain the impact of growth even with constant-returns-to-scale in the long-run GDP.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V82-4KY0G22-6/2/d8923f9cec7e604d58eef8b649849abe
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 28 (2006)
Issue (Month): 7 (October)
Pages: 751-774

as in new window
Handle: RePEc:eee:jpolmo:v:28:y:2006:i:7:p:751-774

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505735

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Duo Qin & Marie Anne Cagas & Geoffrey Ducanes & Xinhua He & Rui Liu & Shiguo Liu & Nedelyn Magtibay-Ramos & Pilipinas Quising, 2006. "A Macroeconometric Model of the Chinese Economy," Working Papers 553, Queen Mary, University of London, School of Economics and Finance.
  2. Hansen, Lars Peter, 2004. "An Interview With Christopher A. Sims," Macroeconomic Dynamics, Cambridge University Press, vol. 8(02), pages 273-294, April.
  3. Dungey, Mardi & Pagan, Adrian, 2000. "A Structural VAR Model of the Australian Economy," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 321-42, December.
  4. Donald A. R. George & Les Oxley & Ken Carlaw, 2003. "Economic Growth in Transition," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 227-237, 07.
  5. Blomström, Magnus & Lipsey, Robert E & Zejan, Mario, 1993. "Is Fixed Investment the Key to Economic Growth?," CEPR Discussion Papers 870, C.E.P.R. Discussion Papers.
  6. Jun, Zhang, 2003. "Investment, investment efficiency, and economic growth in China," Journal of Asian Economics, Elsevier, vol. 14(5), pages 713-734, October.
  7. Kenneth I. Carlaw & Richard G. Lipsey, 2003. "Productivity, Technology and Economic Growth: What is the Relationship?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 457-495, 07.
  8. Cooley, Thomas F. & Leroy, Stephen F., 1985. "Atheoretical macroeconometrics: A critique," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 283-308, November.
  9. King, Robert G. & Plosser, Charles I. & Stock, James H. & Watson, Mark W., 1991. "Stochastic Trends and Economic Fluctuations," American Economic Review, American Economic Association, vol. 81(4), pages 819-40, September.
  10. Pagan, Adrian, 1987. " Three Econometric Methodologies: A Critical Appraisal," Journal of Economic Surveys, Wiley Blackwell, vol. 1(1), pages 3-24.
  11. Jonathan Temple, 2003. "The Long-Run implications of Growth Theories," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 497-510, 07.
  12. Christopher A. Sims, 1989. "Models and their uses," Discussion Paper / Institute for Empirical Macroeconomics 11, Federal Reserve Bank of Minneapolis.
  13. Morris Goldstein & Nicholas R. Lardy, 2004. "What Kind of Landing for the Chinese Economy?," Policy Briefs PB04-07, Peterson Institute for International Economics.
  14. Martin Zagler & Georg Dürnecker, 2003. "Fiscal Policy and Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 397-418, 07.
  15. Abdelhak Senhadji, 2000. "Sources of Economic Growth: An Extensive Growth Accounting Exercise," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 6.
  16. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114 Central Bank of Chile.
  17. Michael R. Wickens & Roberto Motto, 2001. "Estimating shocks and impulse response functions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 371-387.
  18. Imai Hiroyuki, 1994. "China's Endogenous Investment Cycle," Journal of Comparative Economics, Elsevier, vol. 19(2), pages 188-216, October.
  19. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August.
  20. King, Mervyn A & Robson, Mark H, 1993. " A Dynamic Model of Investment and Endogenous Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 445-66, December.
  21. Kwan, Andy C C & Wu, Yangru & Zhang, Junxi, 1999. " Fixed Investment and Economic Growth in China," Economic Change and Restructuring, Springer, vol. 32(1), pages 67-79.
  22. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  23. Christopher A. Sims, 1986. "Are forecasting models usable for policy analysis?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-16.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Tomohara, Akinori & Takii, Sadayuki, 2011. "Does globalization benefit developing countries? Effects of FDI on local wages," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 511-521, May.
  2. Abdelhafidh, Samir, 2013. "Potential financing sources of investment and economic growth in North African countries: A causality analysis," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 150-169.
  3. Il Houng Lee & Murtaza H. Syed & Liu Xueyan, 2013. "China’s Path to Consumer-Based Growth," IMF Working Papers 13/83, International Monetary Fund.
  4. Qin, Duo & Cagas, Marie Anne & Ducanes, Geoffrey & He, Xinhua & Liu, Rui & Liu, Shiguo, 2009. "Effects of income inequality on China's economic growth," Journal of Policy Modeling, Elsevier, vol. 31(1), pages 69-86.
  5. Abdul Karim, Zulkefly & Abdul Karim, Bakri & Ahmad, Riayati, 2010. "Fixed investment, household consumption, and economic growth : a structural vector error correction model (SVECM) study of Malaysia," MPRA Paper 27146, University Library of Munich, Germany.
  6. Xing, Yuqing & Pradhananga, Manisha, 2013. "How Important are Exports and Foreign Direct Investment for Economic Growth in the People’s Republic of China?," ADBI Working Papers 427, Asian Development Bank Institute.
  7. Francisco, Ruth & Wan, Guanghua, 2009. "How is the Global Recession Impacting on Poverty and Social Spending? An ex ante assessment methodology with applications to developing Asia," MPRA Paper 18885, University Library of Munich, Germany.
  8. Duo Qin & Haiyan Song, 2007. "Sources of Investment Inefficiency: The Case of Fixed-Asset Investment in China," Working Papers 584, Queen Mary, University of London, School of Economics and Finance.
  9. Yilmaz Akyuz, 2006. "From Liberalization To Investment and Jobs: Lost in Translation," Working Papers 2006/3, Turkish Economic Association.
  10. Herrerias, M.J. & Orts, Vicente, 2013. "Capital goods imports and long-run growth: Is the Chinese experience relevant to developing countries?," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 781-797.
  11. Nasri Harb, 2009. "Oil Exports, Non-Oil GDP, and Investment in the GCC Countries," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 695-708, November.
  12. Mah, Jai S., 2010. "Foreign direct investment inflows and economic growth of China," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 155-158, January.
  13. Duo Qin & Marie Anne Cagas & Geoffrey Ducanes & Xinhua He & Rui Liu & Shiguo Liu & Nedelyn Magtibay-Ramos & Pilipinas Quising, 2006. "A Macroeconometric Model of the Chinese Economy," Working Papers 553, Queen Mary, University of London, School of Economics and Finance.
  14. Sethi, Amarjit Singh & Kaur, Supreet, 2013. "Physical Capital Formation And Income Relationships: A Temporal Analysis For Punjab And Haryana," Journal of Regional Development and Planning, JRDP, vol. 2(2), pages 109-130.
  15. Germaschewski, Yin, 2013. "Reserve financing and government infrastructure investment: An application to China," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 992-1013.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:28:y:2006:i:7:p:751-774. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.