Past and future sources of growth for China

Shenggen Fan, Sherman Robinson and Xiaobo Zhang

No 53, EPTD discussion papers from International Food Policy Research Institute (IFPRI)

Abstract: This study develops an analytical framework to account for sources of rapid economic growth in China. The traditional Solow approach includes only two sources, i.e. increased use of inputs and technical change. We expanded the approach to include a third source of economic growth-structural change. The empirical results show that structural change has contributed to growth significantly by reallocating resources from low productivity to high productivity sectors, especially by moving labor from agricultural production to rural enterprises. We also found that the returns to capital investment in both agricultural production and rural enterprises are much higher than those in urban sectors, indicating underinvestment in rural areas. On the other hand, labor productivity in the agricultural sector remains low, a result of the still large surpluses of labor in the sector. Therefore, the further development of rural enterprises and increase in labor flow among sectors and across regions are key to improvements in overall economic efficiency.

Keywords: Technological innovations.; Economic development.; China. (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:fpr:eptddp:53

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