Understanding China's Growth: Past, Present, and Future
The pace and scale of China's economic transformation have no historical precedent. In 1978, China was one of the poorest countries in the world. The real per capita GDP in China was only one-fortieth of the U.S. level and one-tenth the Brazilian level. Since then, China's real per capita GDP has grown at an average rate exceeding 8 percent per year. As a result, China's real per capita GDP is now almost one-fifth the U.S. level and at the same level as Brazil. This rapid and sustained improvement in average living standard has occurred in a country with more than 20 percent of the worldâ€™s population so that China is now the second-largest economy in the world. I will begin by discussing briefly China's historical growth performance from 1800 to 1950. I then present growth accounting results for the period from 1952 to 1978 and the period since 1978, decomposing the sources of growth into capital deepening, labor deepening, and productivity growth. But the main focus of this paper will be to examine the sources of growth since 1978, the year when China started economic reform. Perhaps surprisingly, given China's well-documented sky-high rates of saving and investment, I will argue that Chinaâ€™s rapid growth over the last three decades has been driven by productivity growth rather than by capital investment. I also examine the contributions of sector-level productivity growth, and of resource reallocation across sectors and across firms within a sector, to aggregate productivity growth. Overall, gradual and persistent institutional change and policy reforms that have reduced distortions and improved economic incentives are the main reasons for the productivity growth.
Volume (Year): 26 (2012)
Issue (Month): 4 (Fall)
|Contact details of provider:|| Web page: https://www.aeaweb.org/jep/|
More information through EDIRC
|Order Information:||Web: https://www.aeaweb.org/subscribe.html|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Timothy J. Kehoe & Kim J. Ruhl, 2010.
"Why have economic reforms in Mexico not generated growth?,"
453, Federal Reserve Bank of Minneapolis.
- Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why Have Economic Reforms in Mexico Not Generated Growth?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 1005-27, December.
- Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why Have Economic Reforms in Mexico Not Generated Growth?," NBER Working Papers 16580, National Bureau of Economic Research, Inc.
- Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
- Timothy Kehoe & Edward Prescott, 2002.
"Data Appendix to Great Depressions of the Twentieth Century,"
kehoe02, Review of Economic Dynamics.
- Songqing Jin & Hengyun Ma & Jikun Huang & Ruifa Hu & Scott Rozelle, 2010. "Productivity, efficiency and technical change: measuring the performance of China’s transforming agriculture," Journal of Productivity Analysis, Springer, vol. 33(3), pages 191-207, June.
- Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2003.
"Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis,"
diegor-03-01, University of Toronto, Department of Economics.
- Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
- Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2007. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers e07-3, Virginia Polytechnic Institute and State University, Department of Economics.
- Edward C. Prescott & Stephen L. Parente, 1999.
"Monopoly Rights: A Barrier to Riches,"
American Economic Review,
American Economic Association, vol. 89(5), pages 1216-1233, December.
- Li, Wei, 1997.
"The Impact of Economic Reform on the Performance of Chinese State Enterprises, 1980-1989,"
Journal of Political Economy,
University of Chicago Press, vol. 105(5), pages 1080-1106, October.
- Wei Li, 1994. "The Impact of Economic Reform on the Performance of Chinese State Enterprises: 1980--1989," Development and Comp Systems 9410001, EconWPA.
- Timothy J. Kehoe & Edward C. Prescott(), 2007.
"Great depressions of the twentieth century,"
Federal Reserve Bank of Minneapolis, number 2007gdott.
- Loren Brandt & Trevor Tombe & Xiadong Zhu, 2013.
"Factor Market Distortions Across Time, Space, and Sectors in China,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 39-58, January.
- Loren Brandt & Trevor Tombe & Xiadong Zhu, 2012. "Code and data files for "Factor Market Distortions Across Time, Space, and Sectors in China"," Computer Codes 11-95, Review of Economic Dynamics.
- Xiaodong Zhu & Trevor Tombe & Loren Brandt, 2011. "Factor Market Distortions Across Time, Space and Sectors in China," 2011 Meeting Papers 1301, Society for Economic Dynamics.
- Loren Brandt & Trevor Tombe & Xiaodong Zhu, 2012. "Factor Market Distortions across Time, Space and Sectors in China," Working Papers 262012, Hong Kong Institute for Monetary Research.
- Loren Brandt & Trevor Tombe & Xiadong Zhu, 2012. "Online Appendix to "Factor Market Distortions Across Time, Space, and Sectors in China"," Technical Appendices 11-95, Review of Economic Dynamics.
- Zheng (Michael) Song & Guiying (Laura) Wu, 2013. "A Structural Estimation on Capital Market Distortions in Chinese Manufacturing," Economic Growth Centre Working Paper Series 1306, Nanyang Technological University, School of Humanities and Social Sciences, Economic Growth Centre.
- Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012.
"Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing,"
Journal of Development Economics,
Elsevier, vol. 97(2), pages 339-351.
- Loren Brandt & Johannes Van Biesebroeck & Yifan Zhang, 2009. "Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing," NBER Working Papers 15152, National Bureau of Economic Research, Inc.
- Barry Bosworth & Susan M. Collins, 2007.
"Accounting for Growth: Comparing China and India,"
NBER Working Papers
12943, National Bureau of Economic Research, Inc.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
- Dong He & Wenlang Zhang & Gaofeng Han & Tommy Wu, 2014.
"Productivity Growth of the Nontradable Sectors in China,"
Review of Development Economics,
Wiley Blackwell, vol. 18(4), pages 655-666, November.
- Dong He & Wenlang Zhang & Gaofeng Han & Tommy Wu, 2012. "Productivity Growth of the Non-Tradable Sectors in China," Working Papers 082012, Hong Kong Institute for Monetary Research.
- Gary Jefferson & Thomas Rawski & Yifan Zhang, 2008. "Productivity growth and convergence across China's industrial economy," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 6(2), pages 121-140.
- Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
- Chenggang Xu, 2011. "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1076-1151, December.
When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:26:y:2012:i:4:p:103-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)or (Michael P. Albert)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.