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Is Public Capital Productive in China? Evidence from a Panel of Chinese Provinces

Author

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  • Jie Zhang

    (Graduate School of Economics, Keio University, Tokyo 108-8345, Japan)

Abstract

In addition to the direct productivity effect, public capital also has an indirect effect on private capital stock and labor input. This paper offers an evaluation of both the direct and indirect effects of Chinese public capital by applying a trans-log aggregate production function including public capital stock to a panel of regional data from 1986¨C2009. Moreover, we calculate the impact of public capital on regional total factor productivity (TFP) performance by introducing a system GMM estimation. The results show that the output elasticity of Chinese public capital stock is significantly positive, but decreasing year on year, and public capital is found to be a substitute for labor but complementary to private capital input. Finally, public capital has a significant positive effect on regional TFP performance.

Suggested Citation

  • Jie Zhang, 2013. "Is Public Capital Productive in China? Evidence from a Panel of Chinese Provinces," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 8(3), pages 362-389, September.
    • Handle: RePEc:fec:journl:v:8:y:2013:i:3:p:362-389
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-002-013-0019-6
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    More about this item

    Keywords

    Chinese public capital; productivity; total factor productivity;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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