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Productivity Growth in China: Evidence from Chinese Provinces

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Author Info

  • Xiang Ao

    (University of Nebraska)

  • Lilyan E. Fulginiti

    (University of Nebraska)

Abstract

Young (1995) estimated Total Factor Productivity (TFP) growth for Hong Kong, Taiwan, Singapore and South Korea. He reported moderate growth rates for these four regions. This means that rapid growth of GDP in these four economies is due mainly to fast increase of inputs. Young (2000) also estimated the TFP growth rate of China to be 1.4% per year during the period of 1978 to 1998. Similar to his claim for the four 'Asian Tigers', he concluded that 'the productivity performance of the non-agricultural economy (of China) during the reform period is respectable, but not outstanding.' China's real GDP grew at about 9% every year during that period. Is this extraordinary growth rate only due to factor accumulation? Or is it to a large degree due to improved efficiency and innovations? To answer this question, this study uses a panel dataset of real GDP, capital stock, and labor force for 30 provinces for 1978 to 1998 to estimate the TFP for the Chinese economy. Two approaches are used to estimate the aggregate production technology: a fixed-effects model and a stochastic frontier model. Our results are consistent across models indicating a TFP growth rate of 4.9% and 3.3% respectively. Both estimates are higher than Young's 1.9%. Our estimates also indicate that national average of TFP's contribution to GDP growth amount to 41.3% and 38.7%, respectively. Other results of interest indicate that capital has contributed more than labor to GDP growth and that technological change has been labor using.

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File URL: http://128.118.178.162/eps/dev/papers/0502/0502024.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0502024.

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Length: 39 pages
Date of creation: 28 Feb 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0502024

Note: Type of Document - pdf; pages: 39
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Web page: http://128.118.178.162

Related research

Keywords: Productivity growth; China; provinces; stochastic frontier; TFP; technical change; efficiency change;

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References

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  1. Lilyan E. Fulginiti & Richard K. Perrin, 2005. "LDC Agriculture: Non-parametric Malmquist productivity indexes," Development and Comp Systems 0502025, EconWPA.
  2. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August.
  3. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  4. Wing Thye Woo & Michael Magill & Julian R. Betts, 2003. "Chinese Economic Growth: Sources and Prospects," Working Papers 968, University of California, Davis, Department of Economics.
  5. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  6. Lilyan E. Fulginiti & Richard K. Perrin, 1992. "Prices and Productivity in Agriculture," Food and Agricultural Policy Research Institute (FAPRI) Publications 93-gatt2, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  8. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
  9. K.P. Kalirajan & M.B. Obwona & S. Zhao, 1996. "A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth before and after Reforms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 331-338.
  10. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
  11. Putterman, Louis & Chiacu, Ana F., 1994. "Elasticities and factor weights for agricultural growth accounting: A look at the data for China," China Economic Review, Elsevier, vol. 5(2), pages 191-204.
  12. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  13. Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc.
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Cited by:
  1. Henderson, Daniel J. & Tochkov, Kiril & Badunenko, Oleg, 2007. "A drive up the capital coast? Contributions to post-reform growth across Chinese provinces," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 569-594, September.

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