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The Dynamics of Provincial Growth in China: A Nonparametric Approach

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  • Bulent Unel
  • Harm Zebregs

Abstract

China's growth performance since the start of economic reforms in 1978 has been impressive, but the gains have not been distributed equally across provinces. We use a nonparametric approach to analyze the variation in labor productivity growth across China's provinces. This approach imposes less structure on the data than the standard growth accounting framework and allows for a breakdown of labor productivity into efficiency gains, technological progress, and capital deepening. We have the following results. First, we find that on average capital deepening accounts for about 75 percent of total labor productivity growth, while efficiency and technological improvements account for about 7 and 18 percent, respectively. Second, technical change is not neutral. Third, whereas improvement in efficiency contributes to convergence in labor productivity between provinces, technical change contributes to productivity disparity across provinces. Finally, we find that foreign direct investment has a positive and significant effect on efficiency growth and technical progress. IMF Staff Papers (2009) 56, 239–262. doi:10.1057/imfsp.2008.1; published online 11 March 2008

Suggested Citation

  • Bulent Unel & Harm Zebregs, 2009. "The Dynamics of Provincial Growth in China: A Nonparametric Approach," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 239-262, June.
    • Handle: RePEc:pal:imfstp:v:56:y:2009:i:2:p:239-262
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    Cited by:

    1. Henderson, Daniel J. & Tochkov, Kiril & Badunenko, Oleg, 2007. "A drive up the capital coast? Contributions to post-reform growth across Chinese provinces," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 569-594, September.
    2. 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.
    3. Shahid Yusuf, 2012. "From Technological Catch-up to Innovation : The Future of China’s GDP Growth," World Bank Publications - Reports 12781, The World Bank Group.
    4. Oleg Badunenko & Kiril Tochkov, 2010. "Soaring dragons, roaring tigers, growling bears," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 539-570, July.
    5. Declan Curran & Michael Funke & Jue Wang, 2007. "Economic Growth across Space and Time: subprovincial Evidence from Mainland China," Quantitative Macroeconomics Working Papers 20710, Hamburg University, Department of Economics.
    6. Petr Blížkovský, 2012. "Regional disparities and convergences in Asia," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(4), pages 47-58.
    7. 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.
    8. Petr Blížkovský, 2012. "Regional disparities and convergences in America," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(4), pages 37-46.
    9. Yuheng LI & Hans WESTLUND, 2013. "Interpreting Overall Inequality In China: The Roles Of Physical Capital, Human Capital And Social Capital," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 145-150, December.
    10. Petr Blizkovsky, 2012. "Are We Living in a Converging World? Regional Disparities and Convergences from a Global Perspective," Research in World Economy, Research in World Economy, Sciedu Press, vol. 3(2), pages 41-51, September.
    11. Diego Romero-Ávila, 2013. "Is Physical Investment The Key To China'S Growth Miracle?," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 1948-1971, October.

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