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Economic and productivity growth decomposition: An application to post-reform China

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  • Li, Kui-Wai
  • Liu, Tung

Abstract

This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China's post-reform economy. The four attributes of economic growth are input growth, adjusted scale effect, technical progress, and efficiency growth. A stochastic frontier model with a translog production and incorporated with human capital is used to estimate the growth attributes in China. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale effect has become important in recent years. The impact of technical inefficiency is statistical insignificant in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.

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  • Li, Kui-Wai & Liu, Tung, 2011. "Economic and productivity growth decomposition: An application to post-reform China," Economic Modelling, Elsevier, vol. 28(1-2), pages 366-373, January.
  • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:366-373
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    Cited by:

    1. Zhang, Chuanguo & Zhuang, Lihuan, 2011. "The composition of human capital and economic growth: Evidence from China using dynamic panel data analysis," China Economic Review, Elsevier, vol. 22(1), pages 165-171, March.
    2. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2012. "The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities," DEGIT Conference Papers c017_061, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Zhu, Shu & Xu, Xin & Ren, Xiaojing & Sun, Tianhua & Oxley, Les & Rae, Allan & Ma, Hengyun, 2016. "Modeling technological bias and factor input behavior in China's wheat production sector," Economic Modelling, Elsevier, vol. 53(C), pages 245-253.
    4. Kui-Wai Li, 2014. "An analysis on economic opportunity," Applied Economics, Taylor & Francis Journals, vol. 46(33), pages 4060-4074, November.
    5. Liu, Tung & Li, Kui-Wai, 2012. "Analyzing China's productivity growth: Evidence from manufacturing industries," Economic Systems, Elsevier, vol. 36(4), pages 531-551.
    6. Tian, Xu & Yu, Xiaohua, 2012. "The Enigmas of TFP in China: A meta-analysis," China Economic Review, Elsevier, vol. 23(2), pages 396-414.
    7. Zhou, Xianbo & Li, Kui-Wai & Li, Qin, 2011. "An analysis on technical efficiency in post-reform China," China Economic Review, Elsevier, vol. 22(3), pages 357-372, September.
    8. Ding Lu, 2011. "Transition of China’s growth pattern," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(4), pages 535-555, December.
    9. Brock, Gregory & Jin, Yinghua & Zeng, Tong, 2015. "Fiscal decentralization and China's regional infant mortality," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 175-188.
    10. Duc-Anh Le & Phu Nguyen-Van & Thi Kim Cuong Pham, 2016. "Public expenditure, growth and productivity of Vietnam’s provinces," Working Papers of BETA 2016-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    11. Li, Kui-Wai, 2015. "Analyzing the TFP Performance of Chinese Industrial Enterprises," MPRA Paper 67844, University Library of Munich, Germany.

    More about this item

    Keywords

    Technical progress Technical efficiency Returns to scale Human capital China economy;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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