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What Drives China's Growth? Evidence from Micro-level Data

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Listed:
  • Tomoyuki Iida

    (Bank of Japan)

  • Kanako Shoji

    (Bank of Japan)

  • Shunichi Yoneyama

    (Bank of Japan)

Abstract

This paper discusses the sustainability of China fs rapid growth mainly based on the estimation of the corporate-level total factor productivity of Chinese listed firms. Since the 1980s, both capital accumulation and rapid technological progress -- measured as total factor productivity (TFP) -- have contributed to the high growth of the Chinese aggregate output. Should the prediction of the standard growth theory be correct, however, economic growth led by capital accumulation is not likely to be long lasting, hence we mainly focus on firm level TFP growth. As a result, we identify four channels that would continue to promote the TFP growth of the Chinese corporate sector at an aggregate level: (i) declining proportion of low-productivity state-owned enterprises, (ii) continuous influx of highly competent new start-ups, (iii) broad catching up trend among the laggards in the firm distribution, and (iv) innovation spawning R&D activities. These four channels would underpin the medium-term economic growth of the Chinese economy.

Suggested Citation

  • Tomoyuki Iida & Kanako Shoji & Shunichi Yoneyama, 2018. "What Drives China's Growth? Evidence from Micro-level Data," Bank of Japan Working Paper Series 18-E-19, Bank of Japan.
  • Handle: RePEc:boj:bojwps:wp18e19
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    China; Total Factor Productivity; Catching up; R&D;
    All these keywords.

    JEL classification:

    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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