Industrial structure change and economic growth: A China-Russia comparison

This paper examines the sources of economic growth and the nature of industrial structure change in China over the past decade, with a comparison to those in Russia. It shows that over the observation period between 1995 and 2008, the Chinese economy was concentrated relatively more in the manufacturing sector and relatively less in the service sector than the Russian economy. In addition, this paper finds that the higher economic growth rate in real GDP and aggregate labour productivity growth between 1996 and 2008 in China than in Russia was broadly based, with most industries contributing to China's better performance. Furthermore, it reveals that the acceleration in economic growth in China in 2003–2008 over 1996–2002 was mainly traced to an increased contribution from the manufacturing sector and to a lesser degree the service sector, while in Russia, it was the service sector, followed by the primary sector driven by the mining and oil and gas extraction industry. These results suggest that the Chinese and Russian economies complement each other, which bodes well for further economic cooperation and trade between the two countries.     

China,Like the US,Faces Challenges in Achieving Inclusive Growth through Manufacturing

For more than three decades the goal of becoming “the factory of the world” has been at the core of China's development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, has made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China's competitiveness in the most labor‐intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value‐added production domestically. Chinese domestic spending has shifted away from investment toward consumption as citizens' income has grown. Like Americans, Chinese are also spending more on services than on manufactured goods. All of these changes are fundamentally altering the structure of China's production, reducing the role of manufacturing and increasing the skill levels of workers in manufacturing. This paper reviews the challenges posed by these developments for China's long‐term goal of achieving more inclusive growth. It presents evidence that the commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following a pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.     

The Structure of China's Imports: A New Framework

Using the elbow function method to determine the number of classification groups of goods and applying the K‐means algorithm to classify technical goods, this paper constructs a scientific classification framework of commodity structure and then measures the changes in China's import commodity structure. It is found, first, that from 2000 to 2012, the import commodity structure in China underwent structural change. Shares of non‐agricultural primary products and high‐technology products increased significantly, whereas shares of low–medium‐technology products and medium–high‐technology products declined. Second, from 2000 to 2006, the overall technology level of China's imports declined, but then increased from 2007 to 2012. Therefore, the Chinese Government should increase the share of high‐technology and extra‐high‐technology products in total imports to stimulate structural transformation in manufacturing industries to make full use of foreign advanced technology and to prevent stepping into a low‐end import commodity structure.     

Promoting Private Entrepreneurship for Deepening Market Reform in China: A Resource Allocation Perspective

After more than three decades of rapid growth, China's economy is going through an important turning point, where structural imbalances in both supply and demand sides must be addressed for a more moderate and sustainable growth path. By focusing on the structural changes to its ownership, a central element in China's economic transformation under market reform, the present paper highlights the importance of private entrepreneurship in deepening market reform and, thereby, in driving economic growth in a more efficient and sustainable way. Based on a perspective of resource allocation and a conceptual framework of entrepreneurship, the paper elaborates on the evolution of the private sector and its performance in the context of ownership reform, making comparisons with the performance of the state sector. The analysis suggests that there is further room for more productive use of economic resources, especially capital, land and natural resources, by increasing the participation of private entrepreneurs in industries with high entry barriers in favor of state‐owned enterprises. Moreover, more competitive and equal access to productive resources through reform is needed to promote more productive entrepreneurship and to reduce rent‐seeking activities.     

欠发达地区经济增长全要素生产率的测算与分析——以三明市为例

运用索洛模型对三明市经济增长的全要素生产率进行测算和分析,结果表明,改革开放以来,三明市的经济增长主要表现为资本驱动的外延式增长,新世纪以来这种趋势更明显,2000-2007年期间技术进步对经济增长的贡献度是负值。因此,本文提出,三明市应当在注重加大投入的同时,也应当注意提高投入的效益,注重科技对经济的拉动作用,尤其对于拉动全市经济发展的那些主导产业,加大科技创新投入,提高这些产业的生产率,加强这些产业的产业竞争力,实现全市经济的健康、可持续发展。     

Haste Makes Waste: Policy Options Facing China after Reaching the Lewis Turning Point

This paper provides a framework for assessing the health of China's macro economy and the sustainability of economic growth by combining supply‐side and demand‐side factors and by considering their relationship at different stages of development. As the Chinese economy passed through its Lewis turning point, weakened supply‐side factors caused its growth to slow. The increasing concern regarding the economic slowdown has induced both the central and local governments to implement various stimulus plans through instruments of macroeconomic, industrial and regional policies. By examining where the imbalances of the Chinese economy really lie and investigating the determinants of the current slowdown and of the enhancement of the potential growth rate, the present paper suggests that the best path of action for the Chinese Government is not to stimulate growth through demand‐side factors but to increase the potential growth rate through reforms in certain key areas.     

Productivity Growth in Different Plant‐size Groups in the Malaysian Manufacturing Sector*

In the present study, we develop a stochastic frontier production model that allows for different groups of firms to have different patterns of technical efficiency over time. We apply our model to the Malaysian manufacturing sector to decompose total factor productivity growth into technical efficiency change and technical progress for different plant size groups (e.g. large and small) in seven industries during 2000–2004. Our empirical results indicate that technical efficiency has worsened across all industries and plant‐size groups. In contrast, we find evidence of substantial technical progress in all industries. In fact, technical progress has been larger than technical efficiency deterioration in most industries and plant‐size groups, leading to total factor productivity growth. Our analysis identifies the industries and plant‐size groups that lag the most in terms of productivity, and thus have the greatest scope for policies that facilitate productivity growth.     

The impacts of structural transformation and industrial upgrading on regional inequality in China

China has achieved unprecedented success in economic growth since the initiation of economic reforms. The high growth could partly be attributed to the successes in structural transformation of the economy and industrial upgrading of the manufacturing sector toward high value-added products. However, regional inequality in China has increased considerably behind the scenes. In order to have sustainable economic growth, it is thus crucial to investigate the impacts of both structural transformation and industrial upgrading on regional inequality. This paper contributes to the literature by employing a database compiled at the county-level. Decompositions are performed for different spatial groupings so as to provide a clear view of evolution of regional inequality. In addition, the contributions of the major industries to inequality in industrialization are examined by using another database of value-added compiled at the provincial level. The results may have important policy implications for the formulation of a comprehensive and coherent strategy in managing inequality while promoting structural transformation and industrial upgrading.     

Productivity Gains from Offshore Outsourcing: Evidence from the Chinese Manufacturing Industry

Using the Cobb–Douglas production function and vertical specialization share, the present paper measures the productivity spillover effects of offshore outsourcing in the Chinese manufacturing industry. We examine different production factors and the degree of openness by dividing the Chinese manufacturing industry into five major categories: capital‐intensive business, technological‐intensive business, labor‐intensive business, open business and non‐open business. The results show that offshore outsourcing is positively associated with productivity in the Chinese manufacturing industry as a whole, but less so in labor‐intensive industries and more in capital‐intensive industries. Moreover, the positive impact of outsourcing on productivity is slightly higher in open industries than in non‐open industries. These results shed light on the differential spillover effects of offshore outsourcing on productivity. Our findings suggest that outsourcing structure is important to China's long‐run competitive advantage. China's policy‐makers should encourage further offshore capital‐intensive and technology‐intensive activities and focus more on outward‐oriented offshore businesses.     

China＇s Construction Land Expansion and Economic Growth： A Capital-output Ratio Based Analysis

Since 2003, the Chinese Government has included land policy as an important component of macroeconomic policy. The present paper analyzes the impact of the expansion of construction land on economic growth in terms of the capital-output ratio. Using provincial panel data for China from 1999to 2005, we conclude that the excess expansion of China＇s construction land led to an increase in the capital-output ratio. Therefore, expanding construction land has made little contribution to economic growth. This paper argues that contractionary land policy does not deter high economic growth, and is a necessary condition for sustainable economic growth.     

Productivity or Endowments? Sectoral Evidence for Hong Kong's Aggregate Growth*

The present paper provides sectoral evidence that sheds new light on the current debate regarding the sources of growth of the East Asian miracle. We test both the productivity‐driven and endowment‐driven hypotheses using Hong Kong's sectoral data. The results show that most of the growth of the service sector is driven by rapidly‐accumulating capital endowments, and not by productivity growth. In addition, productivity growth in the manufacturing sector is unimpressive. The manufacturing sector is revealed to be more labor intensive than the service sector and its growth is hindered by the reallocation of resources into the service sector as a result of the growth of capital endowments and imports. Overall, sectoral evidence supports the endowment‐driven hypothesis.     

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.     

资源贡献条件下的农业发展与适度规模经营

在稳定的家庭联产承包责任制的基本经营制度下,由于农业内部资源对生产贡献的不平衡驱动,尤其是科技进步对农业经济增长的贡献率高,现阶段我国农业经济仍具有成长的空间,农户经济是成长经济。必须有效供给农业科学技术,促进农业经济成长,缩小农户经济成长空间;并通过农业科学技术的选择性供给,促使农户单独经营与规模经营利差的实现,诱导地权流转,从而实现适度规模经营。     

Manufacturing productivity in China and India: The role of institutional changes

In this paper we undertake a comparative study of productivity in the manufacturing sector for China and India using data from survey of manufacturing industries for the two countries. We find that productivity of manufacturing industries in China relative to that in India improved substantially over the 1998–2003 period. Specifically, the average total factor productivity (TFP) growth for the manufacturing sector over this period was about 11% higher in China than in India. We document two substantial changes in government policies in China that were not witnessed in India. First, the late 1990s saw an enormous wave of ownership restructuring due to the formal endorsement of private property rights by the Chinese central government. Second, in 1997 a large scale labour retrenchment program was launched to address the long standing problem of labour redundancy in the public sector. Using data from the Chinese survey of manufacturing industries, we quantify the impact of these large scale institutional changes on TFP of Chinese manufacturing industries. We find that these policy changes can explain about 30% of the growth in TFP of manufacturing industries. Hence we conclude that these institutional changes in China can account for a significant part of the gains in productivity of manufacturing industries in China relative to that in India over the 1998–2003 period.     

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.     

Vietnam: an economic survey

This paper reviews the two decades of economic development in Vietnam since Doi Moi, with the recurrent theme that integration with the world economy brings substantial benefits when accompanied by domestic reforms—when transition catches up with integration. In the 1990s, liberalisation of the agricultural sector—and of trade generally—led to rapid economic growth and reductions in poverty. Since 2001, addressing the extreme bias against the private sector has resulted in growth via development of labour‐intensive industries as well as enabling Vietnam to climb onto the first rung of the ladder in the global supply chains of electronics and related manufacturing. However, deeper international integration has made the economy more vulnerable to external shocks. Although Vietnam achieved two decades of rapid growth as well as survived the global financial crisis in better shape than most other economies of similar size in the region, prospects of sustaining another decade of rapid growth are far from assured. Vietnam still has very large state‐owned enterprises in capital‐intensive industries. The recent extension of these large enterprises into real estate and finance contributed to de‐stabilise the macro‐economy, and administrative measures were adopted to pare back some of these ‘non‐core’ activities. However, administrative measures are hard to sustain once a crisis is over. The Vietnamese government has the goal of transforming Vietnam into an industrialised society over the coming decade. The recent macroeconomic turbulence has demonstrated that the country needs strong macroeconomic institutions capable of stabilising the economy and setting the parameters for resumption of rapid growth. Thus there is a strong case for the development of modern public institutions as the focus of the third phase of reforms.     

China's Economic Transition Syndrome

Following 30 years of high economic growth, China's economy is in the midst of a classic transition from an industrial to a post‐industrial economy. In this transition period, the mismatch between supply and demand is growing, while the country's economic growth engine is weakening. Stimulus policies have aimed to maintain the country's economic growth momentum but they have come at the price of sharply increased financial fragility and resource misallocation, both of which are harmful to economic growth. China's “economic transition syndrome” refers to the vicious cycle of slowing GDP growth, combined with increasing demand for stimulus policies, and increasing financial fragility and resource misallocation.     

An Examination of Labor Productivity Growth and Structural Changes in the Singapore Labor Force*

This paper ?rst examines the sources of growth in the Singapore economy by decomposing real per capita gross domestic product (GDP) growth into two components. It is found that, for the period 1974–1999, labor productivity was a signi?cant source of economic growth in Singapore. Conversely, the contribution of the rate of change in employment ratio was only of secondary importance. On further decomposition, the rate of change in employment ratio was due mainly to rate of change in population age‐structure ratio and rate of change in labor‐force participation rate. Growth patterns of the labor force were examined after it has been segregated according to gender, citizenship and age group independently. Labor productivity growth was highest in the transport, storage and communication sector, while labor productivity growth was lowest in the ?nancial, insurance, real estate and business services sector.     

广东经济增长及其影响因素分析

本文通过索洛-米德模型和广东的历年经济统计数据,对广东经济增长的影响因素进行了分析。分析结果表明,资本投入仍然是广东经济增长的主要带动因素,科学技术水平对经济增长的贡献份额仍然较低,广东要实现经济长期的、高水平的发展,必须大力推动科技进步及其在经济活动中的作用。