Data on physical capital are an indispensable part of economic growth and efficiency studies. In the case of China, fixed asset time series are usually derived either by aggregating gross fixed capital formation data over time, net of depreciation, or by correcting the limited official fixed asset data available. These procedures, to varying degrees, ignore that (i) gross fixed capital formation does not equal investment, (ii) investment does not equal the value of fixed assets newly created through investment, (iii) depreciation is an accounting measure that has no impact on changes in the production capacity of fixed assets, (iv) official fixed asset data, where available, incorporate significant revaluations in the 1990s, and (v) the variable 'net fixed assets,' frequently used in the literature, is an inappropriate measure of fixed assets for the purpose of growth or efficiency studies. This paper derives economy-wide fixed asset values for 1954-2002, correcting for these shortcomings. It also uses the so far unexplored method of combining economy-wide depreciation data (in the income approach to the calculation of gross domestic product) with an economy-wide depreciation rate to directly yield economy-wide fixed assets. The fixed asset time series derived here are contrasted with each other as well as with those presented in the literature. The reliability of the different series is evaluated, leading to the recommendation of a specific choice of fixed asset time series.
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Find related papers by JEL classification: C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
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Chong-En Bai & Chang-Tai Hsieh & Yingyi Qian, 2006.
"The Return to Capital in China,"
NBER Working Papers
12755, National Bureau of Economic Research, Inc.
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Haizheng Li & Barbara M. Fraumeni & Zhiqiang Liu & Xiaojun Wang, 2009.
"Human Capital In China,"
NBER Working Papers
15500, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)