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Citation Information

Type Journal Article - The Quarterly Journal of Economic
Title Misallocation and manufacturing TFP in China and India
Author(s)
Volume 124
Issue 4
Publication (Day/Month/Year) 2007
Page numbers 1403-1448
URL http://www.nber.org/papers/w13290.pdf
Abstract
Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the potential extent of misallocation in China and India compared to the U.S. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 30-50% in China and 40-60% in India.

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