IDEAS home Printed from https://ideas.repec.org/p/hhs/gunwpe/0130.html
   My bibliography  Save this paper

Structural Change, Capital’s Contribution, and Economic Efficiency: Sources of China’s Economic Growth Between 1952-1998

Author

Listed:
  • Wang, Zijian

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Wei, Jiegen

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

This paper examines the effects of structural change, long-term TFP trend and marginal return to capital on China’s economic growth, comparing such effects with those in the other East Asian economies. Our empirical results show that China’s TFP converges to a higher level, and that the marginal return to capital declines dramatically in the late 1990s. Capital contributes much less, while labor contributes more to China’s post-reform growth. China is catching up via technology adoption from the developed economies, and this in turn results in higher TFP growth. Future growth hinges on improving efficiency in the capital allocation system, whose distortions cause the declining marginal return to capital.

Suggested Citation

  • Wang, Zijian & Wei, Jiegen, 2004. "Structural Change, Capital’s Contribution, and Economic Efficiency: Sources of China’s Economic Growth Between 1952-1998," Working Papers in Economics 130, University of Gothenburg, Department of Economics, revised 05 Apr 2004.
    • Handle: RePEc:hhs:gunwpe:0130
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2077/2789
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jesus Felipe & JSL McCombie, 2002. "Productivity Growth in China Before and After 1978 Revisited," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 5(1), pages 17-43, May.
    2. R McKinnon, 1991. "Financial Control in the Transition to a Market Economy," CEP Discussion Papers dp0040, Centre for Economic Performance, LSE.
    3. Felipe, Jesus & McCombie, J. S. L., 1999. "Wan's "New Approach" to Technical Change: A Comment," Journal of Comparative Economics, Elsevier, vol. 27(2), pages 355-363, June.
    4. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    5. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    6. Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
    7. Baumol, William J & Wolff, Edward N, 1988. "Productivity Growth, Convergence, and Welfare: Reply," American Economic Review, American Economic Association, vol. 78(5), pages 1155-1159, December.
    8. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, vol. 106(437), pages 1037-1044, July.
    9. Gregory C. Chow, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 809-842.
    10. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
    11. Jesus Felipe & J. S. L. McCombie, 2003. "Some methodological problems with the neoclassical analysis of the East Asian miracle," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(5), pages 695-721, September.
    12. Kim Jong-Il & Lau Lawrence J., 1994. "The Sources of Economic Growth of the East Asian Newly Industrialized Countries," Journal of the Japanese and International Economies, Elsevier, vol. 8(3), pages 235-271, September.
    13. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
    14. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    15. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
    16. Felipe, Jesus & McCombie, J. S. L., 2001. "Biased Technical Change, Growth Accounting, and the Conundrum of the East Asian Miracle," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 542-565, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ulrich Fritsche & Vladimir Kuzin, 2011. "Analysing convergence in Europe using the non-linear single factor model," Empirical Economics, Springer, vol. 41(2), pages 343-369, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Y. Wu, 1997. "Productivity & Efficiency: Evidence from the Chinese regional economies," Economics Discussion / Working Papers 97-18, The University of Western Australia, Department of Economics.
    2. Wu, Yanrui, 2000. "Is China's economic growth sustainable? A productivity analysis," China Economic Review, Elsevier, vol. 11(3), pages 278-296.
    3. Zhiqiang Liu, 2000. "The Nature of China's Economic Growth in the Past Two Decades," Post-Communist Economies, Taylor & Francis Journals, vol. 12(2), pages 201-214.
    4. Alberto GABRIELE, 2001. "Science And Technology Policies, Industrial Reform And Technical Progress In China. Can Socialist Property Rights Be Compatible With Technological Catching Up?," UNCTAD Discussion Papers 155, United Nations Conference on Trade and Development.
    5. Adriana Di Liberto, 2007. "Convergence and Divergence in Neoclassical Growth Models with Human Capital," Economia politica, Società editrice il Mulino, issue 2, pages 289-322.
    6. Cao, Kang Hua & Birchenall, Javier A., 2013. "Agricultural productivity, structural change, and economic growth in post-reform China," Journal of Development Economics, Elsevier, vol. 104(C), pages 165-180.
    7. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2022. "Misallocation, Selection, and Productivity: A Quantitative Analysis With Panel Data From China," Econometrica, Econometric Society, vol. 90(3), pages 1261-1282, May.
    8. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2012. "The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities," DEGIT Conference Papers c017_061, DEGIT, Dynamics, Economic Growth, and International Trade.
    9. Tian, Xu & Yu, Xiaohua, 2012. "The Enigmas of TFP in China: A meta-analysis," China Economic Review, Elsevier, vol. 23(2), pages 396-414.
    10. Naubahar Sharif & Can Huang, 2009. "Cross-border Investment and Economic Integration: The Case of Guangdong Province and Hong Kong SAR," Chapters, in: Wilfred Dolfsma & Geert Duysters & Ionara Costa (ed.), Multinationals and Emerging Economies, chapter 6, Edward Elgar Publishing.
    11. Massimo Caruso, 2002. "Procyclical Productivity and Output Growth in China: An Econometric Analysis," Open Economies Review, Springer, vol. 13(3), pages 251-274, July.
    12. Shiu, Alice & Heshmati, Almas, 2006. "Technical Change and Total Factor Productivity Growth for Chinese Provinces: A Panel Data Analysis," Ratio Working Papers 98, The Ratio Institute.
    13. David Rigby & Jurgen Essletzbichler, 2000. "Impacts of Industry Mix, Technological Change, Selection and Plant Entry/Exit on Regional Productivity Growth," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 333-342.
    14. Dong, Qi & Murakami, Tomoaki & Nakashima, Yasuhiro, 2021. "Induced Bias of Technological Change in Agriculture and Structural Transformation: A Translog Cost Function Analysis of Chinese Cereal Production," 2021 Conference, August 17-31, 2021, Virtual 315373, International Association of Agricultural Economists.
    15. Luis R Murillo-Zamorano, "undated". "Total Factor Productivity Growth, Technical Efficiency Change and Energy Input. An International Frontier Analysis," Discussion Papers 03/09, Department of Economics, University of York.
    16. George Hammond & Eric Thompson, 2002. "Mobility and Modality Trends in US State Personal Income," Regional Studies, Taylor & Francis Journals, vol. 36(4), pages 375-387.
    17. Joaquin Maudos & Jose Manuel Pastor & Lorenzo Serrano, 2003. "Human capital in OECD countries: Technical change, efficiency and productivity," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(4), pages 419-435.
    18. Chia-Hung Sun, 2005. "Productivity growth in East Asian manufacturing: a fading miracle or measurement problem?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(1), pages 1-19.
    19. Felipe, Jesus & Lanzafame, Matteo, 2020. "The PRC's long-run growth through the lens of the export-led growth model," Journal of Comparative Economics, Elsevier, vol. 48(1), pages 163-181.
    20. Selin Ozyurt, 2009. "Total Factor Productivity Growth in Chinese Industry: 1952-2005," Oxford Development Studies, Taylor & Francis Journals, vol. 37(1), pages 1-17.

    More about this item

    Keywords

    economic growth; total factor productivity; capital contribution; GARCH model;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C89 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jessica Oscarsson (email available below). General contact details of provider: https://edirc.repec.org/data/naiguse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.