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Growth Accounting Analysis in China 1978-2009

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  • Kang, Lili
  • Peng, Fei

Abstract

This paper applies the growth accounting model to Chinese economy at region and province levels from 1978 to 2009. We measure the components in the growth accounting model such as capital services, labour inputs and Total Factor Productivity (TFP) using various data sources. The economic growth has been decomposed into the contribution of physical capital, labour inputs, labour composition index (LCI) and TFP. We find that Chinese economic growth was mainly pushed by the growth of physical capital, especially in the fastest growing Coastal region. Labour inputs and TFP growth contribute more in the Interior and West regions. Moreover, the contribution shares of physical capital in labour productivity have been declining for the Coastal region, as the TFP contributions have been increasing over the same period. Our results show that the human capital formation from technological and institutional shifts is becoming more and more important in the Coastal region.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50827.

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Date of creation: 20 Oct 2013
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Handle: RePEc:pra:mprapa:50827

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Keywords: Growth Accounting; Total Factor Productivity; Labour Cost;

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  1. Wu, Harry X, 2000. "China's GDP Level and Growth Performance: Alternative Estimates and the Implications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(4), pages 475-99, December.
  2. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
  3. Chinloy, Peter T, 1980. "Sources of Quality Change in Labor Input," American Economic Review, American Economic Association, vol. 70(1), pages 108-19, March.
  4. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, vol. 13(4), pages 331-334, December.
  5. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages F374-F403, 06.
  6. Fleisher, Belton M. & Li, Haizheng & Zhao, Min Qiang, 2007. "Human Capital, Economic Growth, and Regional Inequality in China," IZA Discussion Papers 2703, Institute for the Study of Labor (IZA).
  7. Catherine Robinson & Mary O'Mahony & Michela Vecchi, 2004. "The Impact Of ICT On The Demand For Skilled Labour: A Cross-Country Comparison," Royal Economic Society Annual Conference 2004 91, Royal Economic Society.
  8. Sai Ding & John Knight, 2011. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 141-174, 04.
  9. Kanbur, Ravi & Zhang, Xiaobo, 2004. "Fifty Years of Regional Inequality in China: A Journey through Central Planning, Reform, and Openness," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
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