Overcoming the “Solow paradox”: Tariff reduction and productivity growth of Chinese ICT firms

Hongsheng Zhang, Yueling Wei and Shuzhong Ma

Journal of Asian Economics, 2021, vol. 74, issue C

Abstract: This paper examines the phenomenon of the “Solow paradox” in China using the Annual Survey of Industrial Production database and the China Customs Records dataset from 1998 to 2007. We find that China likely fell into the Solow paradox in the period 1998–2002, but the total factor productivity of information and communication technology (ICT) enterprises has achieved rapid growth since 2003. Accession to the World Trade Organization is the key reason for China to overcome the Solow paradox, that is, input tariff reduction significantly promoted the productivity of ICT firms. A series of validity and robustness checks confirmed the results. Mechanism analysis shows that input liberalization promotes the productivity of ICT firms through optimizing factor structure, importing more and high-quality inputs, and increasing research and development investment. The conclusions provide strong empirical evidence for developing countries to overcome the Solow paradox through trade liberalization.

Keywords: Solow paradox; ICT industry; TFP; Import liberalization (search for similar items in EconPapers)
JEL-codes: D24 F14 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1049007821000452
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:74:y:2021:i:c:s1049007821000452

DOI: 10.1016/j.asieco.2021.101316

Access Statistics for this article

Journal of Asian Economics is currently edited by C. Wiemer

More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().