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Where Has All the Dynamism Gone? Productivity Growth in China's Manufacturing Sector, 1998-2013

Author

Listed:
  • Loren Brandt
  • Johannes Van Biesebroeck
  • Luhang Wang
  • Yifan Zhang

Abstract

China's manufacturing sector has been a key source of the economy's dynamism. Analysis after 2007 however is hampered by problems in the key data source for empirical analysis, the National Bureau of Statistics' (NBS) annual survey of industrial firms. Issues include missing information on value added and intermediate inputs, and concerns of over-reporting. The annual survey of firms conducted by China's State Taxation Administration (STA) provides a reliable, alternative source of firm-level data for years from 2007 to 2013. Since the sample is not representative and the precise sampling scheme is not known, the data cannot be used directly to draw inferences on China's manufacturing sector. By comparing the joint distribution of key variables for which both surveys provide reasonably reliable information, we recover the sampling scheme of the STA survey and use it to simulate samples for 2007 to 2013 that are comparable to the NBS sample in earlier years. Our estimates reveal a marked slowdown in revenue-based total factor productivity growth that cuts across all industries, ownership types, and regions. The loss of dynamism in the private sector, and the reduced contribution of firm entry to aggregate productivity growth are especially prominent.

Suggested Citation

  • Loren Brandt & Johannes Van Biesebroeck & Luhang Wang & Yifan Zhang, 2023. "Where Has All the Dynamism Gone? Productivity Growth in China's Manufacturing Sector, 1998-2013," Working Papers tecipa-759, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-759
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    References listed on IDEAS

    as
    1. Chong-En Bai & Qiong Zhang, 2017. "Is the People's Republic of China's current slowdown a cyclical downturn or a long-term trend? A productivity-based analysis," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(1), pages 29-46, January.
    2. 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.
    3. Min Zhu & Ms. Longmei Zhang & Daoju Peng, 2019. "China’s Productivity Convergence and Growth Potential—A Stocktaking and Sectoral Approach," IMF Working Papers 2019/263, International Monetary Fund.
    4. Shihe Fu & V Brian Viard & Peng Zhang, 2021. "Air Pollution and Manufacturing Firm Productivity: Nationwide Estimates for China [Management and shocks to worker productivity]," The Economic Journal, Royal Economic Society, vol. 131(640), pages 3241-3273.
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    More about this item

    Keywords

    China; manufacturing; productivity; growth;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • L - Industrial Organization
    • D - Microeconomics

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