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A quantitative analysis of China’s structural transformation

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  • Robert Dekle
  • Guillaume Vandenbroucke

Abstract

Between 1978 and 2003 the Chinese economy experienced a remarkable 5.7 percent annual growth of GDP per labor. At the same time, there has been a noticeable transformation of the economy: the share of workers in agriculture decreased from over 70 percent to less than 50 percent. We distinguish three sectors: private agriculture and nonagriculture and public nonagriculture. A growth accounting exercise reveals that the main source of growth was TFP in the private nonagricultural sector. The reallocation of labor from agriculture to nonagriculture accounted for 1.9 percent out of the 5.7 percent growth in output per labor. The reallocation of labor from the public to the private sector also accounted for a significant part of growth in the 1996-2003 period. We calibrate a general equilibrium model where the driving forces are public investment and employment, as well as sectorial TFP derived from our growth accounting exercise. The model tracks the historical employment share of agriculture and the labor productivities of all three sectors quite well.

Suggested Citation

  • Robert Dekle & Guillaume Vandenbroucke, 2006. "A quantitative analysis of China’s structural transformation," Proceedings, Federal Reserve Bank of San Francisco, issue jun.
    • Handle: RePEc:fip:fedfpr:y:2006:i:jun:x:3
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    Cited by:

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    2. Zepu Zhang & Jing Wang & Chen Sun, 2024. "Digital financial inclusion, rural consumption and economic growth in China," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(4), pages 809-829, September.
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    4. Badibanga, Thaddee Mutumba & Diao, Xinshen & Roe, Terry L. & Somwaru, Agapi, 2008. "Dynamics of Structural Transformation: Understanding the Key Factors That Drive Innovative Activities in Selected Asian and African Countries," Bulletins 43890, University of Minnesota, Economic Development Center.
    5. Ricardo de Avillez, 2012. "Sectoral Contributions to Labour Productivity Growth: Does the Choice of Decomposition Formula Matter?," CSLS Research Reports 2012-09, Centre for the Study of Living Standards.

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