Total Factor Productivity Growth in Chinese Industry: 1952–2005

Abstract

This paper presents new estimates of total factor productivity (TFP) growth in Chinese industry over the past half century that seek to improve on earlier estimates in several respects: better data series are developed for capital and labour; the production function is estimated with fewer restrictive assumptions and corrected for serial correlation; and the TFP estimates are adjusted for cyclical fluctuations. The paper also offers a broader than usual interpretation of TFP growth. Its main findings are: (i) that over the whole period 1952–2005 the main source of industrial output growth was capital accumulation; (ii) that during the period since 1980 TFP growth also contributed significantly to industrial output growth; and (iii) that TFP growth in Chinese industry accelerated from the late 1980s, probably as a result of changes in the pattern of ownership and increased integration into the world economy.