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What Drives China's Growth? Evidence from Micro-level Data

Tomoyuki Iida, Kanako Shoji and Shunichi Yoneyama
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Tomoyuki Iida: Bank of Japan
Kanako Shoji: Bank of Japan
Shunichi Yoneyama: Bank of Japan

No 18-E-19, Bank of Japan Working Paper Series from Bank of Japan

Abstract: This paper discusses the sustainability of China fs rapid growth mainly based on the estimation of the corporate-level total factor productivity of Chinese listed firms. Since the 1980s, both capital accumulation and rapid technological progress -- measured as total factor productivity (TFP) -- have contributed to the high growth of the Chinese aggregate output. Should the prediction of the standard growth theory be correct, however, economic growth led by capital accumulation is not likely to be long lasting, hence we mainly focus on firm level TFP growth. As a result, we identify four channels that would continue to promote the TFP growth of the Chinese corporate sector at an aggregate level: (i) declining proportion of low-productivity state-owned enterprises, (ii) continuous influx of highly competent new start-ups, (iii) broad catching up trend among the laggards in the firm distribution, and (iv) innovation spawning R&D activities. These four channels would underpin the medium-term economic growth of the Chinese economy.

Keywords: China; Total Factor Productivity; Catching up; R&D (search for similar items in EconPapers)
JEL-codes: N15 O30 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-eff, nep-ent, nep-ino, nep-sbm, nep-tid and nep-tra
Date: 2018-11-13
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