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Regional human capital in Republican and New China: Its spread, quality and effects on economic growth

Author

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  • Van Leeuwen, Bas
  • van Leeuwen-Li, Jieli
  • Foldvari, Peter

Abstract

In recent decades there has been increasing attention for Chinese economic development. There has been a big debate though if its growth is caused by capital accumulation (perspiration factors) or driven by Total Factor Productivity (TFP) growth (inspiration factors). The difference between both stances is quite substantial since, if the perspiration theory is correct, one expects the growth of the Chinese economy to slow down over time as the capital accumulation grows increasingly less efficient. However, so far this question is difficult to analyse for China since we lack information on one of the factors of production, human capital. To analyse this question, in this paper we develop a new dataset on human capital for the provinces of China between 1922 and 2010. Using our new dataset, together with physical capital and per capita GDP, allows us to do a TFP analysis for sub periods. We find a continuously negative TFP growth suggesting that reduction in productivity was a structural feature of the Chinese economy. If true, this was to lend support to the perspiration theory and would suggest a slowdown of the Chinese economy in the future. However, standard growth accounting allocates both technical efficiency of the factors of production and the general technical development to TFP. Subtracting technical efficiency from TFP growth, we find that general technological development turns increasingly positive in the 1990s and 2000s. This suggests that, whereas until the reform period China was largely driven by capital accumulation, afterwards general technical development got an increasingly prominent place giving hope for continued economic development in the future.

Suggested Citation

  • Van Leeuwen, Bas & van Leeuwen-Li, Jieli & Foldvari, Peter, 2011. "Regional human capital in Republican and New China: Its spread, quality and effects on economic growth," MPRA Paper 43582, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43582
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    References listed on IDEAS

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    Cited by:

    1. Dmitry Didenko & Péter Földvári & Bas van Leeuwen, 2013. "Inspiration and Perspiration Factors in Economic Growth: The Former Soviet Union Area versus China (ca. 1920-2010)," Global COE Hi-Stat Discussion Paper Series gd12-283, Institute of Economic Research, Hitotsubashi University.
    2. Xu, Yi & Foldvari, Peter & Van Leeuwen, Bas, 2013. "Human capital in Qing China: economic determinism or a history of failed opportunities?," MPRA Paper 43525, University Library of Munich, Germany.
    3. Van Leeuwen, Bas & van Leeuwen-Li, Jieli & Foldvari, Peter, 2012. "Education as a driver of income inequality in twentieth-century Africa," MPRA Paper 43574, University Library of Munich, Germany.

    More about this item

    Keywords

    education; human capital; China; history; growth; inequality; regional development;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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