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Productivity Dynamics of Chinese Manufacturing Firms

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  • Qu FENG

    (Department of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)

  • Zhifeng WANG

    (Department of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)

  • Guiying Laura WU

    (Department of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)

Abstract

China has experienced high-speed catch-up growth with an average annual rate of over 8% in per capita GDP in the past four decades. Using growth accounting, Zhu (2012) nds that the growth of total factor productivity (TFP) accounts for 77% of Chinas per capita GDP growth during 1978-2007, and argues that Chinas TFP growth is mainly driven by resource reallocation due to market liberalization and institutional reforms. This paper aims to estimate Chinas aggregate productivity growth by applying three leading methods of estimating rm-level production function on Chinese manufacturing rms during 1998-2007, and quantify the contribution of resource reallocation to productivity growth. In addition, we also empirically compare the three estimation methods in this large data set.

Suggested Citation

  • Qu FENG & Zhifeng WANG & Guiying Laura WU, 2017. "Productivity Dynamics of Chinese Manufacturing Firms," Economic Growth Centre Working Paper Series 1706, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:1706
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    References listed on IDEAS

    as
    1. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
    2. Sai Ding & Alessandra Guariglia & Richard Harris, 2016. "The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007," Journal of Productivity Analysis, Springer, vol. 45(2), pages 131-155, April.
    3. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    4. Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1719-1742, September.
    5. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    6. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    7. John Haltiwanger, 1997. "Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence," Review, Federal Reserve Bank of St. Louis, issue May, pages 55-78.
    8. Daniel A. Ackerberg & Kevin Caves & Garth Frazer, 2015. "Identification Properties of Recent Production Function Estimators," Econometrica, Econometric Society, vol. 83, pages 2411-2451, November.
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    10. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, December.
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    12. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
    13. Miaojie Yu, 2015. "Processing Trade, Tariff Reductions and Firm Productivity: Evidence from Chinese Firms," Economic Journal, Royal Economic Society, vol. 125(585), pages 943-988, June.
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    More about this item

    Keywords

    Chinas economic growth; TFP growth; production function; resource reallocation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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