Imperfect Competition, Economic Miracle, and Manufacturing Productivity Growth: Empirical Evidence from Taiwan

Several recent studies on total factor productivity (TFP) concluded that the East Asian economies benefited little from TFP growth. This study claims that the failure by previous studies to consider the effect of net indirect taxes and market imperfections resulted in the underestimation of the share of the contribution of labor input to factor income, which consequently led to the overestimation of capital share and understatement of TFP growth. Therefore, this study has modified the conventional approach of calculating factor shares by taking account of net indirect taxes and market imperfections and used the modified approach to estimate TFP growth in 16 Taiwanese manufacturing industries during the period 1979–1999. The conclusion drawn by the study is that TFP growth was the driving force behind the success of Taiwan's manufacturing industries, although many of these industries experienced a sharp decline in TFP during the 1990s.     

THE ROLE OF HUMAN CAPITAL IN CHINA'S TOTAL FACTOR PRODUCTIVITY GROWTH: A CROSS‐PROVINCE ANALYSIS

This paper studies the role of human capital in China's provincial total factor productivity (TFP) growth over 1985–2004. The stochastic frontier approach is employed to measure the productivity growth of Chinese provinces. Human capital is measured both qualitatively and quantitatively. In particular, enrolment rates at various levels of schooling are used to represent human capital composition. After controlling for endogeneity, we find that human capital has significant and positive effects on the TFP growth of Chinese provinces. However, when education quality is incorporated, productivity growth appears to be significantly enhanced by quality improvements in primary education only. Regional impacts of human capital are found to differ at various levels of schooling. In the eastern region of China, productivity growth is significantly associated with secondary education. TFP growth in the central region is mainly promoted by primary and university education. Yet in the western region, primary education plays the most prominent role.     

Explaining the Productivity Growth Gap Between China and India: The Role of Structural Transformation

Chinese and Indian aggregate productivity growth has been significantly different over the last 30 years. This paper studies the role of structural transformation in accounting for the aggregate productivity growth gap between two economies. We calibrate a neoclassical model of structural transformation for China and India. The model implies that higher productivity growth in China's manufacturing and agriculture accounts for most of the aggregate productivity growth gap between the two countries. According to the development strategy of China's government, China would start a new phase of structural transformation whereby employment is moving from manufacturing to services. Since the productivity growth gap in services is pretty small between China and India, if China wants to remain superior in relative productivity, it should improve the productivity growth rate of services. In contrast, the relative performance in India hinges on closing its productivity gap in agriculture and manufacturing relative to China.     

The Rise and Fall of Exceptional Australian Incomes Since 1800

We gauge how productivity and factor endowments shaped the rise and fall of Australia's exceptional incomes using new measures of total factor productivity (TFP), which include natural resource inputs, in an accounting of income growth. Further, we explore the drivers of TFP growth. Pastoralism and mining had negative TFP externalities, and we incorporate these findings into a unified accounting of incomes, which distinguishes the roles of endowments and productivity. Nevertheless, TFP growth played an important role in promoting exceptional incomes between 1842 and 1890. Our findings favour a more balanced interpretation of Australian growth that has roles for natural resources, labour participation, and productivity.     

Income inequality and ethnic cleavages in Malaysia: Evidence from distributional national accounts (1984–2014)

In this paper, by combining information obtained from national accounts, household surveys, and fiscal data, we document the evolution of income inequality in Malaysia, not only at the national level (for the period of 1984–2014) but also by ethnic group (for the period of 2002–2014). To our knowledge this is the first attempt to produce inequality measurements of Malaysia, which are fully consistent with the national accounts. Our research shows that despite Malaysia’s exceptional economic growth rate, its growth has been inclusive. For the period of 2002–2014, the real income growth for the bottom 50 % is the highest (5.2 %), followed by the middle 40 % (4.1 %), the top 10 % (2.7 %) and then the top 1 % (1.6 %). However, while average growth rates are positive across all ethnic groups (Bumiputera 4.9 %, Indians 4.8 %, and Chinese 2.7 %), the highest growth of real income per adult accrued to the Bumiputera in the top 1 % (at 8.3 %), which sharply contrasts the much lower growth rate of the Indians (at 3.4 %) and negative income growth rates of the Chinese (at −0.6 %). Despite the negative growth rate, the Chinese still account for the lion’s share in the top 1 %. In 2014, 60 % of the adults in the top 1 % income group are Chinese, while 33 % Bumiputera, and 6 % Indians. We conclude that in this period, Malaysia’s growth features an inclusive redistribution between income classes, but with a twist between racial groups.     

An Empirical Analysis of Provincial Productivity in China (1979–2001)

This study estimates and analyzes provincial productivity growth in China for the period 1979–2001. The Malmquist Index approach allows us to decompose productivity growth into two components, technological progress and efficiency change. Considerable productivity growth was found for most of the data period, but it was accomplished mainly through technological progress rather than efficiency improvement. Although China's capital stock has accumulated at record speed in recent years, our findings show that TFP growth slowed down significantly during 1995–2001. The study thus raises serious questions about whether China's recent growth pattern is consistent with its comparative advantages, and whether its reliance on capital accumulation can be sustained in the long run.     

Transactional activities and total factor productivity growth in Taiwan

Total factor productivity (TFP) growth shows how rapidly an economy is enhancing technology and the efficiency with which it allocates resources. It has been argued that “miraculous” growth in East Asian economies may not be sustainable, due to relatively low rates of TFP growth. Among these economies, it appears that Taiwan has indeed exhibited substantial technological progress. Failure to control for transactional activities, however, can distort the impression of TFP growth. This study recalculates Taiwan's TFP growth for the 1957–1993 sample period, adjusting for transaction costs in the government and private sectors. For the early years of the sample, 1957–1973, the economy's technological progress is better than GDP-based calculations suggest. In recent years, 1983–1993, productivity improvement has been overstated, but the economy has still exhibited relatively fast TFP growth.     

The unreported income and its impact on Gini coefficient in China

ABSTRACT

Unreported income is an important factor that distorts China’s household income accounting and Gini coefficient calculation. On the basis of comparing NBS household survey data and data from China’s Cash Flow Statement, this paper estimates the size and structure of unreported income in China over recent years. Our study found that about 20% of household disposable income has not been covered by existing household surveys in recent years. In 2015, the omission rate was 19.5%. Operating income and property income have the highest omission rates. Considering that unreported income is primarily owned by high-income people, China’s falling Gini coefficient since 2009 may have resulted from the statistical omission of partial incomes of high-income group. If unreported income is re-included, China’s Gini coefficient would increase by 10 percentage points rather than decrease.     

Total Factor Productivity Convergence in Developing Countries: Role of Technology Diffusion

In recent years, though total factor productivity (TFP) convergence phenomenon has gained tremendous importance yet further deliberations for identification of catalytic factors that can help developing countries to achieve their steady developmental paths, are under way. Against this backdrop, present study investigates the principal determinants of TFP convergence by employing data of 91 developing countries over the period 1960–2015 and with USA being the frontier country. In concordance with the existing literature, main focus remains on technology diffusion for the catch‐up process and is measured by means of trade openness (TO) and foreign direct investment (FDI) with introduction of their interaction terms. However, TFP is computed by incorporating the Growth Accounting Model while empirical results are drawn from the 2‐step GMM estimation technique. It is surfaced that though high degree of openness benefits TFP growth and convergence but FDI has a dominating role. Therefore, governments can play a competent role via unflagging efforts in ensuring that the right kind of policies are enacted, promoting trading activities and FDI flows.     

环境约束下中国区域工业技术效率与生产率及其影响因素实证研究

本文运用方向性距离函数和曼奎斯特-卢恩伯格指数方法测算了环境约束下中国1998--2007年各地区工业技术效率、全要素生产率指数和环境规制成本,并对影响技术效率和全要素生产率增长的因素进行了实证分析。结果显示：环境技术效率呈现东、中、西依次递减,并且技术效率越高的地区,环境管制成本越低;考虑环境因素后,中国各地区工业全要素生产率指数降低,主要是由技术进步推动;环境约束下工业全要素生产率东部最高,西部次之,中部最低;人均GRP、FDI、工业结构、能源结构、人口密度对技术效率和全要素生产率有不同程度的影响。     

Income Distribution across Ethnic Groups in Malaysia: Results from a New Social Accounting Matrix

A new social accounting matrix is constructed for Malaysia for the year 2000 to analyze sources of income inequality among ethnic groups in Malaysia. The analysis reveals that income inequality can be decomposed into the interaction of: (i) hourly wages; (ii) working hours per week; and (iii) number of dependents per household. The results of the analysis suggest that occupational differences are the main factor contributing to wage inequality in Malaysia. Ethnic Malays tend to work in low‐wage industries while ethnic Chinese and Indians are more likely to work in higher‐wage industries.     

Total Factor Productivity in China's Manufacturing Sector in the Aftermath of the Global Financial Crisis

This paper improves the estimation of firm-level total factor productivity (TFP) by considering energy use and including small- and medium-sized enterprises using data from the Chinese National Tax Survey Database (2008–2011). It analyzes the production efficiency of Chinese manufacturing firms using the improved TFP data and finds that (i) the TFP data frequently used in previous studies overestimated firms' real production efficiency; (ii) the TFP of manufacturing firms decreased from 2008 to 2011 due to declines in both technical efficiency and allocation efficiency; (iii) the lower capacity utilization of production factors led to lower technical efficiency; and (iv) allocation efficiency decreased more in provinces and industries with higher shares of state-owned enterprises. The findings have policy implications for enhancing growth potential in the long run.     

The Future is in the Past: Projecting and Plotting the Potential Rate of Growth and Trajectory of the Structural Change of the Chinese Economy for the Next 20 Years

Based on the convergence hypothesis and referring to the experience of East Asian high‐performing economies from 1950 to 2010, this paper projects and plots the potential growth rate of the Chinese economy over the next 20 years. It predicts that the potential growth rate of per capita GDP adjusted by purchasing power parity averages at 6.02 percent from 2015 to 2035, while the potential GDP growth rate of 2015 would still be above 8 percent, which implies that the realized rate of growth has not reached its potential since 2012. Besides, based on the per capita GDP projected and on cross‐country comparison, the paper plots the trajectory of structural change of the Chinese economy from 2015 to 2035. The result shows that: (i) the value‐added share of primary industry will drop more rapidly than the employment share; (ii) the value‐added share of secondary industry will decline and employment share will present an inverted U shape whose turning point will probably come between 2020 and 2025; (iii) both the value‐added and employment share of tertiary industry will increase continuously.     

An Application of the Extended Glass and McKillop Procedure for Computing TFP Growth to the Malaysian Rice Sector

The objective of the present study is three-fold: to employ an aggregated data to investigate the total factor productivity (TFP) growth of the Malaysian rice sector; to investigate the sources of the TFP growth; and, to examine and extend the Glass and McKillop procedure for computing TFP growth. To this end, we establish several procedures which make it possible for us to: (i) link the TFP analysis with the theory of production; (ii) disentangle the sources of TFP growth into scale and technological change effects; and (iii) apply, compute, examine and extend the Glass and McKillop procedure for computing TFP growth.The finding of the study is as follows. (i) Using the standard procedure forcomputing TFP growth it was found that the average TFP growth for Malaysian rice farming was 1.37%, of which the scale effect contributed 0.29% and the remaining 1.08% was due to the technological change effect. (ii) Using the extended Glass and McKillop procedure, however, it was found that the average TFP growth, the technological change effect and the scale effect were 3.48%, 3.19% and 0.29%, respectively. (iii) Comparing these two results, derived from two different procedures, we concluded that the difference in magnitude of the TFP growth was due to the two distinct procedures for computing the technological change effect per se.     

FDI与中国全要素生产率的变动——基于DEA与协整分析的实证检验

FDI的流入对我国经济发展和技术进步所起到的影响一直是存在较大争论的问题。本文以中国改革开放以来的数据为基础,通过数据包络分析(DEA)方法对我国近年来全要素生产率的变动情况进行了估算,在此基础上,通过建立协整与误差修正模型讨论了FDI的流入对我国全要素生产率变动的影响,并由此认为FDI的流入对全要素生产率的提升不会在短期内得到体现,而更多的表现为一种长期趋势性过程。     

Total factor productivity growth for 12 Asian economies: The past and the future

This study examines the importance of TFP growth in the long-term past and future economic growth of 12 Asian economies. We analyze the pattern of past growth based on a calculation of TFP growth, investigate the TFP dynamics by estimations of a TFP growth model, decompose the factors affecting TFP growth, and offer long-term projections of TFP growth. The main findings are as follows. First, results suggest that the growth accounting paradigm has shifted in the recent decade toward a productivity-based growth paradigm. Second, the catch-up effect is the major source of TFP growth in past decades, and the human capital contribution to TFP growth is gradually rising in Hong Kong, Korea, Singapore, and Taiwan in the most recent decade but is stagnated or weakened for other Asian economies. Third, the results project strong TFP growth for the two subperiods of 2010–2020 and 2020–2030 and thus suggest that the productivity-based growth will continue in the future long-term growth of the Asian economies.     

Money demand in China and time-varying cointegration

Many studies analyze the money demand using a (fixed coefficient) cointegrating regression model, which may not be appropriate to deal with the money demand of a transition economy like China. This paper investigates this issue using a time-varying cointegration approach based on the quarterly data from 1996 to 2009. We find some interesting results: (i) the estimates of the income elasticities are between 0.60 and 0.75, which are comparable with the previous studies; (ii) the estimated interest rate elasticity supports the argument that the overall effect of the interest rate on the money holding is weak although there are some mild evidences that it has been strengthened in recent years; (iii) the substitution effect of equity asset dominates the wealth effect, especially, during the bullish market period. Our result is robust to the alternative choices of the scale or opportunity cost variables and shows that omission of the stock prices in the money demand function would possibly yield a misspecification problem.     

Can Time–Space Compression Promote Urban Economic Growth? Evidence from China's High‐speed Rail Projects

This paper studies the effect of high‐speed rail (HSR) on urban economic growth using a panel data comprising 285 Chinese cities in 2007–2017. Combining the endogenous growth model with a difference‐in‐difference analysis, we extend the horse‐mass theory to explain how China may use HSR to avoid the so‐called middle‐income trap. The paper also examines the efficient boundaries of HSR and simultaneously studies HSR time–space compression as well as the city neighboring effects on economic growth. It is found that HSR's efficient boundaries are within the range of 200–1,200 km for provincial capitals and 50–300 km for prefecture‐level cities. HSR stimulates economic growth by approximately 0.6 percent, and the neighboring effect accounts for one‐quarter of economic growth. Three policy implications are drawn: (i) China needs to further reduce the travel times between the inland provincial cities and Beijing, Shanghai or Guangzhou; (ii) China should build a denser HSR network to maximize its economic impact on the vast majority of cities; (iii) China needs to develop some powerful economic growth centers in the inland areas to lead the development of their neighboring cities.     

Measuring Green Productivity Growth for China's Manufacturing Sectors: 1991–2000*

Over the past two decades, China has sustained rapid economic growth of 8–10 percent, part of which is attributed to the positive total factor productivity (TFP) growth. However, this extraordinary economic performance has been accompanied by severe environmental pollution and associated health damage. The conventional TFP method is biased in interpreting the progress of technology change because it does not consider non‐marketable residues, such as environmental pollution, and, hence, efficiency improvements in terms of pollution abatement technology and environmentally friendly management are ignored. This bias might direct our attention to less efficient use of environmental friendly abatement technologies or send wrong signals to policy‐makers. To address this issue, the present paper applies a modified welfare‐based green TFP approach, treating environmental damage as non‐desirable (negative) residual output. Therefore, environmental efficiency is taken into account to accurately interpret technological progress from a social welfare point of view. Based on a national time‐series input–output table, historical capital and labor input data for China and sectoral level air pollution emission data from 1991 to 2000, the empirical results suggest that with increasingly stringent environmental regulations, many pollution intensive sectors, such as electricity, primary metal and chemical industries, improved their environmental efficiency in the late 1990s. However, because of the weak environmental regulations in construction and transportation, and in sectors primarily composed of small private or township and village industrial enterprises, firms within these industries contributed to increasing environmental degradation.     

China's industrial revolution: challenges for a macroeconomic agenda

China's industrialization over the past 30 years has been an epochal event. As of 2000, the industrial sector's share of GDP has grown to be about two-third of the total. The share of agricultural sector of GDP has expectedly declined from 42.2% in 1970 to 11.9% in 2000. The sector's total output however continues to grow as productivity increases. Has the service sector grown enough to support the overall growth of the Chinese economy?China has earned her recognition as a foreign investment friendly economy. Foreign direct investment with 100% foreign ownership came in plenty, supported by a robust system of profit repatriation based on earnings in convertible currencies of exports of a part of newly manufactured products in China. China imported capital and paid for it by exports. China demonstrates a clear case of the import-export led model of industrialization and economic growth, not the simple export-led growth model, as discussed by some.This paper discusses that challenges ahead of China are overwhelming. We present three issues for immediate attention, (a) Can China sustain a rate of growth of GDP at an annual rate of 10% for an indefinite period? (b) How can China address the issues of income distribution across her 31 province and also amongst the various income groups in a given industrialized province/region? (c) Can China ensure progressive augmentation of high-tech oriented productivity of her workforce by way of ensuring building up of necessary human capital?It is argued that much of this can be accomplished by developing a macroeconomic framework with monetary and fiscal policy guidelines, well specified and transparent. Can China restructure its central bank, the Peoples Bank of China (PBOC)? A progressive money, banking and financial sector with ability to absorb shocks of an industrial economy must be in order. How about the fiscal policy management by the Government of China—its Ministry of Finance?Finally this paper argues that China's economic presence will help optimize the economic gains for the rest of the world. China has joined her Asian neighbors toward sponsoring Asian economic cooperation. Let the European Union paradigm be a learning model, and China has a leadership role to play in further developing Asia's continental economic regional model.