Sources of Growth in Mainland China: An Investigation Using the Dual Approach

Type Conference Paper - 9th Convention of the East Asian Economic Association 13-14 November, Hong Kong
Title Sources of Growth in Mainland China: An Investigation Using the Dual Approach
Publication (Day/Month/Year) 2004
This paper examines the sources of economic growth in mainland China using the dual
approach to growth accounting This approach is useful because of numerous problems
that continue to beset Chinese national income accounts data, despite attempts to rectify
them. Almost all growth accounting studies conducted on China so far have followed the
primal approach, which depends heavily on national income accounts data. The dual
approach, by contrast, allows independent price information to play a role. Recent
research on Chinese growth has revolved around the following two questions: (a) How
significant has TFP’s role been in post-reform Chinese growth? (b) Has TFP growth rate
slowed down in more recent years? Examination of the Chinese growth using the dual
approach provides the following answers to these questions: (a) In contrast to what Hseih
(2002) found for Singapore, the rate of TFP growth for mainland China using the dual
approach proves similar to the high TFP growth rates that have been obtained by many
researchers using the primal approach. (b) The rate of TFP growth in China has slowed
down a little, but still remains high. These results however need to be taken with a grain
of salt, mainly because of the weak nature of the data on rate of return to capital in
mainland China. (JEL Classification: O47; O53. Keywords: Economic Growth; Total Factor
Productivity; China)

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