Understanding the mystery of continued rapid economic growth

Shangfeng Zhang, Yaoxin Liu and Duen-Huang Huang

Journal of Business Research, 2021, vol. 124, issue C, 529-537

Abstract: This study examines the fixed output-elasticity assumption of the neoclassical economic growth model and introduces the time-varying elasticity production function model to measure China's time-varying factor income share. Combined with the dual economic theory, the phenomenon of China's “high investment rate-high savings rate-high growth rate” is explained. Meanwhile, the driving forces of economic growth are decomposed, and a total factor productivity (TFP) decomposition formula is given, which includes China’s unique factor structure change. We found that sufficient labor hinders the law of diminishing marginal factors, and the demographic dividend is the main reason for the mystery of China’s continued rapid economic growth; the “Krugman-Questioning” underestimated the contribution of TFP to its economic growth. The Cobb-Douglas production function cannot reflect structural changes in the process of China's economic growth but, the time-varying elasticity production function can reasonably describe it, which provides a new perspective for understanding developing countries' economic growth.

Keywords: China's economic miracle; Factor return rate; Krugman-Questioning; Total factor productivity; Time-varying elasticity production function (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S014829632030775X
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:jbrese:v:124:y:2021:i:c:p:529-537

DOI: 10.1016/j.jbusres.2020.11.023

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

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