Misallocation and Manufacturing TFP in China and India

Chang-Tai Hsieh and Pete Klenow

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the potential extent of misallocation in China and India compared to the U.S. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 30-50% in China and 40-60% in India.

Pages: 60 pages
Date: 2009-02
New Economics Papers: this item is included in nep-cwa, nep-eff and nep-tra
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Citations: View citations in EconPapers (3107)

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https://www2.census.gov/ces/wp/2009/CES-WP-09-04.pdf First version, 2009 (application/pdf)
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Related works:
Journal Article: Misallocation and Manufacturing TFP in China and India (2009)
Working Paper: Misallocation and Manufacturing TFP in China and India (2008)
Working Paper: Misallocation and Manufacturing TFP in China and India (2007)
Working Paper: Misallocation and manufacturing TFP in China and India (2007)
Working Paper: Misallocation and Manufacturing TFP in China and India (2007)
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