The Impacts of the Growth of the Three Industries and Industrial Price Structural Changes on China’s Economic Growth between 1952 and 2019

Dihai Wang

China Finance and Economic Review, 2021, vol. 10, issue 4, 3-27

Abstract: This paper focuses on the impacts and effects of China’s growth of the three industries and price structural change on the real GDP growth rate. First of all, it presents a new accounting method for decomposing growth rates on the basis of existing accounting method for decomposing growth rates. By using this method, we can identify the impacts and effects of structural changes on the growth rate. The paper uses a new decomposition method to recalculate China’s industry-based real GDP growth rates between 1952 and 2019, focuses on the driving effect of growth of the three industries on the real GDP growth, and the impacts of price structural change on GDP growth rate and the contributin of the growth of the three industries on GDP growth rate. By analysis, this paper shows that between 1952 and 2019 China’s economic growth was mainly driven by the secondary industry, which had contributed to the economic growth by over 50%, the role of the tertiary industry in driving economic growth rose, but that of the secondary industry declined over the time; in the short run, the overall effect of the price structural changes of the three industries has a little impact on the economic growth, but the price change of each industry has strong effects, and the price structural change has significantly changed the effect of the growth of the three industries on the real economic growth; in the long term, the price structural change plays a relatively big hindering effect on economic growth due to the Baumol’s cost disease.

Keywords: economic growth; three industries; price structural change; decomposition of economic growth rate (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:10:y:2021:i:4:p:3-27:n:3

DOI: 10.1515/cfer-2021-0020

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