Has Productivity Contributed to China's Growth?

This paper applies an extended Solow approach to examine the role of productivity in China's economic growth. The extended Solow approach allows the decomposition of output growth into factor contributions, technological progress and efficiency change. It is found that total factor productivity (TFP) has on average contributed to 13.5 percent of China's economic growth in the past two decades. This contribution is mainly due to technological progress which tends to accelerate over time. However, during 1982–97 efficiency change due to catch–up has been very volatile, reflecting the uncertainties associated with economic reforms and transition in China.