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Economic and Productivity Growth Decomposition: An Application to Post-reform China

  • Kui-Wai Li

    ()

    (City University of Hong Kong, Hong Kong SAR)

  • Tung Liu

    ()

    (Department of Economics, Ball State University)

This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China’s post-reform economy. The four attributes of economic growth are input growth, adjusted scale effect, technical progress, and efficiency growth. A stochastic frontier model with a translog production and incorporated with human capital is used to estimate the growth attributes in China. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale effect has become important in recent years. The impact of technical inefficiency is statistical insignificant in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.

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File URL: http://econfac.iweb.bsu.edu/research/workingpapers/bsuecwp200904li.pdf
File Function: First version, 2009
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Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200904.

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Length: 23 pages
Date of creation: Sep 2009
Date of revision: Sep 2008
Publication status: forthcoming in Economic Modelling
Handle: RePEc:bsu:wpaper:200904
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Web page: http://www.bsu.edu/econ

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