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Comparing China and India: A factor accumulation perspective

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  • Kan, Kamhon
  • Wang, Yong

Abstract

The remarkable economic transformations in China and India in recent decades have been accompanied by almost equally remarkable different development patterns. For example, the empirical data during 1985–2004 show that, compared with India, China’s economy has exhibited (i) considerably higher rates of physical capital formation; (ii) much higher ratios of measured physical to human capital; and (iii) a more physical-capital-friendly public policy. Motivated by these empirical observations, we study the accumulation of both physical and human capital in a one-sector growth model with a CES production function. After deriving some qualitative implications from the model, we estimate the key technological parameters of the normalized CES production function using the panel data at the provincial level for China and at the state level for India. Our estimation results suggest that our model implications match broadly with the above stylized development patterns regarding China and India.

Suggested Citation

  • Kan, Kamhon & Wang, Yong, 2013. "Comparing China and India: A factor accumulation perspective," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 879-894.
  • Handle: RePEc:eee:jcecon:v:41:y:2013:i:3:p:879-894
    DOI: 10.1016/j.jce.2013.01.008
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    Cited by:

    1. Li, Tingting & Lai, Jennifer T. & Wang, Yong & Zhao, Dingtao, 2016. "Long-run relationship between inequality and growth in post-reform China: New evidence from dynamic panel model," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 238-252.
    2. Gómez, Manuel A., 2015. "Capital–labor substitution and long-run growth in a model with physical and human capital," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 106-113.

    More about this item

    Keywords

    Physical and human capital; Normalized CES production function; Chinese and Indian economic development;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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