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

Misallocation and Manufacturing TFP in China and India

Contents:

Author Info

  • Chang-Tai Hsieh

    (University of Chicago Booth School of Business and NBER Stanford University, SIEPR, SCID, and NBER.)

  • Peter J. Klenow

    (University of Chicago Booth School of Business and NBER Stanford University, SIEPR, SCID, and NBER.)

Abstract

Resource misallocation can lower aggregate total factor productivity (TFP). We use microdata on manufacturing establishments to quantify the potential extent of misallocation in China and India versus the United States. We measure sizable gaps in marginal products of labor and capital across plants within narrowly defined industries in China and India compared with the United States. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the United States, we calculate manufacturing TFP gains of 30%-50% in China and 40%-60% in India. (c) 2009 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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.mitpressjournals.org/doi/pdfplus/10.1162/qjec.2009.124.4.1403
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

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 MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 124 (2009)
Issue (Month): 4 (November)
Pages: 1403-1448

as in new window
Handle: RePEc:tpr:qjecon:v:124:y:2009:i:4:p:1403-1448

Contact details of provider:
Web page: http://mitpress.mit.edu/journals/

Order Information:
Web: http://mitpress.mit.edu/journal-home.tcl?issn=00335533

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. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  2. Arvind Subramanian & Raghuram Rajan & Ioannis Tokatlidis & Kalpana Kochhar & Utsav Kumar, 2006. "India's Pattern of Development," IMF Working Papers 06/22, International Monetary Fund.
  3. Wendy Dobson & Anil K. Kashyap, 2006. "The Contradiction in China's Gradualist Banking Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 103-162.
  4. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
  5. Arturo Galindo & Fabio Schiantarelli & Andrew Weiss, 2005. "Does Financial Liberalization Improve the Allocation of Investment? Micro Evidence from Developing Countries," Boston College Working Papers in Economics 625, Boston College Department of Economics.
  6. Guner, Nezih & Ventura, Gustavo & Xu, Yi, 2007. "Macroeconomic Implications of Size-Dependent Policies," CEPR Discussion Papers 6138, C.E.P.R. Discussion Papers.
  7. David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," 2004 Meeting Papers 530, Society for Economic Dynamics.
  8. Lucia Foster & John Haltiwanger & Chad Syverson, 2005. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," NBER Working Papers 11555, National Bureau of Economic Research, Inc.
  9. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  10. Kochhar, Kalpana & Kumar, Utsav & Rajan, Raghuram & Subramanian, Arvind & Tokatlidis, Ioannis, 2006. "India's pattern of development: What happened, what follows?," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 981-1019, July.
  11. Aghion, Philippe & Burgess, Robin & Redding, Stephen J & Zilibotti, Fabrizio, 2006. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," CEPR Discussion Papers 5492, C.E.P.R. Discussion Papers.
  12. Caselli, Francesco & Gennaioli, Nicola, 2003. "Dynastic Management," CEPR Discussion Papers 3767, C.E.P.R. Discussion Papers.
  13. Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Working Papers tecipa-283, University of Toronto, Department of Economics.
  14. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2007. "Comparing alternative representations and alternative methodologies in business cycle accounting," Staff Report 384, Federal Reserve Bank of Minneapolis.
  15. David Dollar & Shang-Jin Wei, 2007. "Das (Wasted) Kapital," IMF Working Papers 07/9, International Monetary Fund.
  16. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-38, October.
  17. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  18. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
  19. Stefano Scarpetta: & John Haltiwanger & Eric Bartelsman:, 2007. "Cross Country Differences in Productivity: The Role of Allocative Efficiency," 2007 Meeting Papers 134, Society for Economic Dynamics.
  20. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2006. "Business cycle accounting," Staff Report 328, Federal Reserve Bank of Minneapolis.
  21. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  22. Laura Alfaro & Andrew Charlton & Fabio Kanczuk, 2009. "Plant-Size Distribution and Cross-Country Income Differences," NBER Chapters, in: NBER International Seminar on Macroeconomics 2008, pages 243-272 National Bureau of Economic Research, Inc.
  23. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
  24. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  25. Amartya Lahiri & Kei-Mu Yi, 2009. "A Tale of Two States: Maharashtra and West Bengal," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 523-542, July.
  26. Yongseok Shin & Francisco Buera, 2007. "Financial Frictions and the Persistence of History: A Quantitative Exploration," 2007 Meeting Papers 300, Society for Economic Dynamics.
  27. Peter Howitt, 2000. "Endogenous Growth and Cross-Country Income Differences," American Economic Review, American Economic Association, vol. 90(4), pages 829-846, September.
  28. David Dollar & Shang-Jin Wei, 2007. "Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China," NBER Working Papers 13103, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The 57,000 Page Tax Return
    by Alex Tabarrok in Marginal Revolution on 2011-11-22 12:38:52
  2. Gaps and Triangles
    by Stephen Williamson in Stephen Williamson: New Monetarist Economics on 2012-12-10 03:33:00
  3. Is France less distorted than we think?
    by Economic Logician in Economic Logic on 2013-11-21 15:01:00
  4. El costo de la mal-asignacion de recursos
    by Nicolas Cachanosky in Punto de Vista Economico on 2014-02-06 03:01:36
  5. Defining Development Economics
    by dvollrath in The Growth Economics Blog on 2014-04-18 20:49:15
  6. Restuccia and Santaeulalia-Llopis on Land Misallocation
    by dvollrath in The Growth Economics Blog on 2014-07-13 15:12:49
  7. David, Hopenhayn, and Venkateswaran on Misallocation
    by dvollrath in The Growth Economics Blog on 2014-07-13 14:53:20
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is featured on the following reading lists or Wikipedia pages:

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tpr:qjecon:v:124:y:2009:i:4:p:1403-1448. 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: (Karie Kirkpatrick).

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.