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Trade, structural transformation and growth in China

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  • Pedro Cavalcanti Ferreira
  • Marcelo Rodrigues dos Santos
  • Leonardo Fonseca da Silva

Abstract

China's recent performance in economic growth was characterized by high investment rate, increase in international trade, strong productivity growth in agriculture and nonfarm sectors and the reallocation of labor across sectors. We present a standard dynamic general equilibrium model of structural transformation for the Chinese economy to assess the contributions of the main drivers for the Chinese economic development. Our paper differs from other contributions to the literature by adding an external sector to the general equilibrium model of structural transformation. By doing that, we are able to estimate the contribution of trade to the economic development of China. We estimate that the contribution of trade to China's economic growth was 26% of total economic growth during the period from 1980-2005. Moreover, the agricultural sector explained 27% of Chinese economic performance from 1980 to 2005.

Suggested Citation

  • Pedro Cavalcanti Ferreira & Marcelo Rodrigues dos Santos & Leonardo Fonseca da Silva, 2013. "Trade, structural transformation and growth in China," Business and Economics Working Papers 196, Unidade de Negocios e Economia, Insper.
    • Handle: RePEc:aap:wpaper:196
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