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Structural Change, Capital’s Contribution, and Economic Efficiency: Sources of China’s Economic Growth Between 1952-1998

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Author Info

  • Wang, Zijian

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Wei, Jiegen

    ()
    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

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    Abstract

    This paper examines the effects of structural change, long-term TFP trend and marginal return to capital on China’s economic growth, comparing such effects with those in the other East Asian economies. Our empirical results show that China’s TFP converges to a higher level, and that the marginal return to capital declines dramatically in the late 1990s. Capital contributes much less, while labor contributes more to China’s post-reform growth. China is catching up via technology adoption from the developed economies, and this in turn results in higher TFP growth. Future growth hinges on improving efficiency in the capital allocation system, whose distortions cause the declining marginal return to capital.

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    File URL: http://hdl.handle.net/2077/2789
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    Bibliographic Info

    Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 130.

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    Length: 23 pages
    Date of creation: 12 Mar 2004
    Date of revision: 05 Apr 2004
    Handle: RePEc:hhs:gunwpe:0130

    Contact details of provider:
    Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
    Phone: 031-773 10 00
    Web page: http://www.handels.gu.se/econ/
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    Related research

    Keywords: economic growth; total factor productivity; capital contribution; GARCH model;

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    1. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, vol. 106(437), pages 1037-44, July.
    2. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    3. Jesus Felipe & J. S. L. McCombie, 2003. "Some methodological problems with the neoclassical analysis of the East Asian miracle," Cambridge Journal of Economics, Oxford University Press, vol. 27(5), pages 695-721, September.
    4. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
    5. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    6. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
    7. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    8. Jesus Felipe & JSL McCombie, 2002. "Productivity Growth in China Before and After 1978 Revisited," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 5(1), pages 17-43, May.
    9. Chow, G.C., 1990. "Capital Formation And Economic Growth In China," Papers 67, Princeton, Woodrow Wilson School - Discussion Paper.
    10. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
    11. Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
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    Cited by:
    1. Ulrich Fritsche & Vladimir Kuzin, 2011. "Analysing convergence in Europe using the non-linear single factor model," Empirical Economics, Springer, vol. 41(2), pages 343-369, October.

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