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Why has China Grown So Fast? The Role of Physical and Human Capiital Formation

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Author Info
Sai Ding
John Knight

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Abstract

The paper estimates cross-province growth regressions for China over the period of economic reform. It first addresses the problem of model uncertainty by adopting two approaches to model selection, Bayesian Model Averaging and the automated General-to-Specific approach, to consider a wide range of candidate predictors of growth in China. The first-stage model selection results identify a role for conditional convergence, physical and human capital formation, population growth, degree of openness, and institutional change. Starting from this baseline equation, the growth impact of physical and human capital is examined in some detail using panel data system GMM. For instance, ‘investment in innovation’, foreign direct investment, and private investment are found to be particularly important. Secondary school enrolment contributes to growth, and higher education enrolment even more so. Finally, some illustrative counterfactual predictions are conducted to answer the question: why has China, as a whole, and indeed all its provinces, grown so fast?

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 414.

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Date of creation: 2008
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Handle: RePEc:oxf:wpaper:414

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Keywords: Economic Growth; Convergence; Physical Capital; Human Capital; China;

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Find related papers by JEL classification:
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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Cited by:
(explanations, 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.)

  1. Sai Ding & John Knight, 2008. "Why has China Grown So Fast? The Role of Structural Change," Economics Series Working Papers 415, University of Oxford, Department of Economics. [Downloadable!]
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