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Estimating Capital Formation and Capital Stock by Economic Sector in China : The Implications for Productivity Growth

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  • Herd,Richard

Abstract

This paper aims to fill a gap in the literature on capital formation in China by estimating the capital stock in four economic sectors: business, infrastructure, government, and housing. Such a breakdown is necessary for the purpose of analysis of economic development in China, as the normal models of economic development are based on a competitive economy, which is clearly not the case for the country's infrastructure and government sectors. Moreover, the contribution of housing to gross domestic product in China is very poorly measured. Although the results of this analysis can only be approximate, as the required detailed information for a better estimate is not published, they nonetheless suggest that there has not been overinvestment in the Chinese business sector -- its capital-output ratio has risen only slightly over the past 40 years. Yet, there have been surges in the stocks of housing and infrastructure in the past decade. These sectors account nearly all the recent increase in the capital-output ratio in China.

Suggested Citation

  • Herd,Richard, 2020. "Estimating Capital Formation and Capital Stock by Economic Sector in China : The Implications for Productivity Growth," Policy Research Working Paper Series 9317, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9317
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    Cited by:

    1. Jesús Fernández-Villaverde & Lee Ohanian & Wen Yao, 2023. "The Neoclassical Growth of China," CESifo Working Paper Series 10499, CESifo.
    2. Chen, Jie & Chen, Yu & Hill, Robert J. & Hu, Pei, 2022. "The user cost of housing and the price-rent ratio in Shanghai," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    3. Lawrence H. Goulder & Xianling Long & Chenfei Qu & Da Zhang, 2023. "China’s Nationwide CO2 Emissions Trading System: A General Equilibrium Assessment," NBER Working Papers 31809, National Bureau of Economic Research, Inc.
    4. Takatoshi Sasaki & Tomoya Sakata & Yui Mukoyama & Koichi Yoshino, 2021. "China's Long-Term Growth Potential: Can Productivity Convergence Be Sustained?," Bank of Japan Working Paper Series 21-E-7, Bank of Japan.
    5. Eswar Prasad, 2023. "Has China's Growth Gone from Miracle to Malady?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 54(1 (Spring), pages 243-270.

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