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Decomposition of Economic and Productivity Growth in Post-reform China

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Author Info
Kui-Wai Li () (City University of Hong Kong, Hong Kong SAR)
Tung Liu () (Department of Economics, Ball State University)
Lihong Yun () (City University of Hong Kong, Hong Kong SAR)

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Abstract

This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China’s post-reform economy. The four attributes of economic growth are input growth, adjusted economies of scale effect, technical progress, and efficiency growth. A stochastic frontier model is used to estimates the growth attributes, and a human capital variable is incorporated in the translog production function. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale economies has become important in recent years, but technical efficiency has edged downwards in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.

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File URL: http://web.bsu.edu/cob/econ/research/papers/bsuecwp200806li.pdf
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Publisher Info
Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200806.

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Length: 37 pages
Date of creation: Dec 2008
Date of revision: Dec 2008
Handle: RePEc:bsu:wpaper:200806

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Related research
Keywords: technical progress; technical efficiency; economies of scale; human capital; China economy;

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Find related papers by JEL classification:
C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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