Misallocation and Manufacturing TFP in China and India

Chang-Tai Hsieh and Pete Klenow

No 13290, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: O11 O47 O53 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-dev, nep-eff and nep-tra
Note: EFG PR
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Citations: View citations in EconPapers (106)

Published as Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1403-1448, November.

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Journal Article: Misallocation and Manufacturing TFP in China and India (2009)
Working Paper: Misallocation and Manufacturing TFP in China and India (2009)
Working Paper: Misallocation and Manufacturing TFP in China and India (2008)
Working Paper: Misallocation and manufacturing TFP in China and India (2007)
Working Paper: Misallocation and Manufacturing TFP in China and India (2007)
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