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Evolution of Structural Indicators. China and Regions: 1981-2010

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Abstract

This paper deals with some structural indicators and their evolution, in China and regions, over the period 1981-2010. We first produce estimates of the optimal productivities of incremental capital and the optimal incremental income elasticity of capital by means of a linear programming exercise. We then produce an accounting growth decomposition to assess the changes in the contribution of capital productivity, capital intensity and labour participation to the growth rate of output per capita. Finally, we combine an accounting growth decomposition with a standard production function, growth accounting, decomposition to assess both the contribution of both capital productivity and capital intensity to total factor productivity (TFP). We also show in an appendix the difference in the TFP growth contribution when marginal elasticities are assumed variable over time and when scale returns are assumed increasing rather than constant. Our main conclusion is that capital intensity, rather than capital productivity or labour participation, has been the main growth contributor. But this does not mean that quantity in itself, rather than quality, is behind such growth, as total factor productivity, which is significantly more than engineering technical change, has been relatively important over the period.

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  • Jose Miguel Albala-Bertrand, 2013. "Evolution of Structural Indicators. China and Regions: 1981-2010," Working Papers 701, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:wp701
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    1. Eswar Prasad & Shang-Jin Wei, 2007. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Chapters,in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 421-480 National Bureau of Economic Research, Inc.
    2. Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc.
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    4. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
    5. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.
    6. Wang, Yan & Yao, Yudong, 2003. "Sources of China's economic growth 1952-1999: incorporating human capital accumulation," China Economic Review, Elsevier, vol. 14(1), pages 32-52.
    7. Gary Jefferson & Thomas Rawski & Yifan Zhang, 2008. "Productivity growth and convergence across China's industrial economy," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 6(2), pages 121-140.
    8. Jinghai Zheng & Zheng Wang & Jinchuan Shi, 2008. "Industrial productivity performance in Chinese regions (1987-2002): a decomposition approach," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 6(2), pages 157-175.
    9. Jose Miguel Albala-Bertrand, 2007. "Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method," Working Papers 610, Queen Mary University of London, School of Economics and Finance.
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    12. Hofman, André A., 2000. "The economic development of Latin America in the twentieth century," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1650 edited by Eclac, December.
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    Keywords

    Structural indicators; Incremental capital productivity; Growth decomposition; Optimal consistency method (OCM); Total factor productivity (TFP);

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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