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A Global View of Productivity Growth in China

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  • Chang-Tai Hsieh
  • Ralph Ossa
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    Abstract

    We revisit a classic question in international economics: how does a country's productivity growth affect worldwide real incomes through international trade? We first identify the channels through which productivity shocks transmit in a model featuring inter-industry trade as in Ricardo (1817), intra-industry trade as in Krugman (1980), and firm heterogeneity as in Melitz (2003). We then estimate China's productivity growth at the industry level and use our model to quantify what would have happened to real incomes throughout the world if nothing but China's productivity had changed. We find that average real income in the rest of the world increased by a cumulative 0.48% from 1992-2007 due to China's productivity growth. This represents 2.2% of the total income gains to the world.

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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd10-166.pdf
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    Bibliographic Info

    Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd10-166.

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    Date of creation: Feb 2011
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    Handle: RePEc:hst:ghsdps:gd10-166

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    Keywords: Productivity growth; China;

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