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A Quantitative Analysis of China’s Structural Transformation

Robert Dekle () and Guillaume Vandenbroucke ()

No 06.51, IEPR Working Papers from Institute of Economic Policy Research (IEPR)

Abstract: Between 1978 and 2003 the Chinese economy experienced a remarkable 5.7 percent annual growth of GDP per labor. At the same time, there has been a noticeable transformation of the economy: the share of workers in agriculture decreased from over 70 percent to less than 50 percent. We distinguish three sectors: private agriculture and nonagriculture and public nonagriculture. A growth accounting exercise reveals that the main source of growth was TFP in the private nonagricultural sector. The reallocation of labor from agriculture to nonagriculture accounted for 1.9 percent out of the 5.7 percent growth in output per labor. The reallocation of labor from the public to the private sector also accounted for a significant part of growth in the 1996- 2003 period. We calibrate a general equilibrium model where the driving forces are public investment and employment, as well as sectorial TFP derived from our growth accounting exercise. The model tracks the historical employment share of agriculture and the labor productivities of all three sectors quite well.

Keywords: China; structural transformation; growth (search for similar items in EconPapers)
JEL-codes: O41 O53 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-05
New Economics Papers: this item is included in nep-cna, nep-dev, nep-sea and nep-tra
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Journal Article: A quantitative analysis of China's structural transformation (2012) Downloads
Journal Article: A quantitative analysis of China’s structural transformation (2006) Downloads
Working Paper: A quantitative analysis of China’s structural transformation (2006) Downloads
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