Structural Breaks, Rural Transformation and Total Factor Productivity Growth in China

Kefei You and Nicholas Sarantis

No 332026, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This paper carries out an empirical investigation of the contribution of rural transformation, which can produce efficiency gains over and above those associated with technical progress, to total factor productivity in China during 1970-2008. For the first time for China, the roles of rural transformation and technical progress are examined whilst structural breaks are taken into account. We employ Bai and Perron (1998, 2003a, b) methods which allow for multiple structural breaks at unknown dates and can be applied for both pure and partial structural changes. We also evaluate the robustness of our results by employing alternative production functions and two capital series. A structural break near the end of the pre-reform period is identified for both capital series and another one near the Tiananmen Square incident in 1989 for the extended Chow and Li (2002) capital series. We found the contribution of rural transformation to total factor productivity to be significant and positive across all regimes. In contrast, the effect of technical progress was negative in the pre-reform period but positive in the post-reform period.

Keywords: Community/Rural/Urban Development; Productivity Analysis (search for similar items in EconPapers)
Pages: 34
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332026

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