Convergence, productivity and industrial growth in China during the reform era

Abstract

This thesis examines the Chinese economy by focusing on three issues: convergence, total factor productivity (TFP) and industrial growth. The study of convergence was undertaken using a panel of China’s 28 provinces over the period 1979-2004. The share of physical capital in China’s output was found to be 0.23 and the provinces were found to converge at a rate of 5.6 per cent per annum. To calculate the growth of TFP for China’s 29 provinces in this period, the non-parametric Malmquist index approach was employed in the analysis. It was found that, for China as a whole, TFP grew at a rate of 2.75 per cent per annum, which accounted for 30.02 per cent of its real GDP growth. The aim of the study of industrial growth was to examine the correlates of growth of 26 industries in 9 provinces of the Eastern Zone of China over the period 2001 to 2005. The analysis identified the dynamic externalities and province-specific externalities that were important to province-industrial growth. It also discovered an evident trend in the period under study of conditional convergence within the 26 industries in the Eastern Zone.