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Why has China Grown so Fast? The Role of Structural Change

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  • John Knight
  • Sai Ding

Abstract

In this paper we attempt to explore some indirect determinants of China's growth success including the degree of openness, institutional change and sectoral change, based on a cross-province dataset.� The methodology we adopt is the informal growth regression, which permits the introduction of some explanatory variables that represent the underlying as well as the proximate causes of growth.� We first address the problem of model uncertainty by adopting two approaches to model selection, BMA and GETS, to consider a wide range of candidate predictors of growth in China.� Then variables flagged as being important by these procedures are used in formulating our models, in which the contribution of factors behind the proximate determinants are examined in some detail using panel data system GMM.� All three forms of structural change - relative expansion of the trade sector, of the private sector, and of the non-agricultural sector - are found to raise the growth rate.� Moreover, structural change in all three dimensions was rapid over the study period.� Each change primarily represents an improvement in the efficiency of the economy, moving it towards its production frontier.� We conclude that such improvements in productive efficiency have been an important part of the explanation for China's remarkable rate of growth.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 415.

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Date of creation: 01 Dec 2008
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Handle: RePEc:oxf:wpaper:415

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Keywords: Economic Growth; Structural Change; Openness; Institutional Change; China;

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Cited by:
  1. Sai Ding & Alessandra Guariglia & John Knight, 2010. "Does China overinvest? Evidence from a panel of Chinese firms," Working Papers 2010_05, Durham University Business School.
  2. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, 09.
  3. Selin Özyurt & Jean-Pascal Guironnet, 2011. "Productivity, scale effect and technological catch-up in Chinese regions," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 4(2), pages 64-80, June.
  4. John Knight & Sai Ding, 2010. "Why Does China Invest So Much?," Asian Economic Papers, MIT Press, vol. 9(3), pages 87-117, October.
  5. repec:hal:wpaper:halshs-00667467 is not listed on IDEAS
  6. Sai Ding & John Knight, 2008. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Economics Series Working Papers 414, University of Oxford, Department of Economics.
  7. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.

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