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Past and Future Sources of Growth For China

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  • Fan, Shenggen
  • Zhang, Xiaobo
  • Robinson, Sherman

Abstract

This study develops an analytical framework to account for sources of rapid economic growth in China. The traditional Solow approach includes only two sources, i.e. increased use of inputs and technical change. We expanded the approach to include a third source of economic growth—structural change. The empirical results show that structural change has contributed to growth significantly by reallocating resources from low productivity to high productivity sectors, especially by moving labor from agricultural production to rural enterprises. We also found that the returns to capital investment in both agricultural production and rural enterprises are much higher than those in urban sectors, indicating underinvestment in rural areas. On the other hand, labor productivity in the agricultural sector remains low, a result of the still large surpluses of labor in the sector. Therefore, the further development of rural enterprises and increase in labor flow among sectors and across regions are key to improvements in overall economic efficiency.

Suggested Citation

  • Fan, Shenggen & Zhang, Xiaobo & Robinson, Sherman, 1999. "Past and Future Sources of Growth For China," EPTD Discussion Papers 42829, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:eptddp:42829
    DOI: 10.22004/ag.econ.42829
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    References listed on IDEAS

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    6. Pardey, Philip G. & Alston, Julian M. & Chan-Kang, Connie & Magalhaes, Eduardo Castelo & Vosti, Stephen A., 2002. "Assessing And Attributing The Benefits From Varietal Improvement Research: Evidence From Embrapa, Brazil," EPTD Discussion Papers 16103, CGIAR, International Food Policy Research Institute (IFPRI).
    7. Falck-Zepeda, José & Komen, John & Linacre, Nicholas & MacLaren, Donald, 2006. "Risk assessment and management of genetically modified organisms under Australia's Gene Technology Act:," EPTD discussion papers 157, International Food Policy Research Institute (IFPRI).
    8. Kui-Wai Li & Tung Liu, 2004. "Performance of financial resources in China's provinces," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 9(1), pages 32-48.
    9. Renkow, Mitch, 2010. "Impacts of IFPRI's "priorities for pro-poor public investment" global research program," Impact assessments 31, International Food Policy Research Institute (IFPRI).
    10. Gruere, Guillaume P. & Giuliani, Alessandra & Smale, Melinda, 2006. "Marketing underutilized plant species for the benefit of the poor: a conceptual framework," EPTD Discussion Papers 55418, CGIAR, International Food Policy Research Institute (IFPRI).
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    13. Smale, Melinda & Zambrano, Patricia & Falck-Zepeda, Jose Benjamin & Gruere, Guillaume P., 2006. "Parables: applied economics literature about the impact of genetically engineered crop varieties in developing economies," EPTD Discussion Papers 55412, CGIAR, International Food Policy Research Institute (IFPRI).

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