Research
Research
Structural Change, Industrial Transition, Productivity Growth, Trade, Regional Disparities, Income Convergence, Labour
[Abstract] Why has the structural bonus been so small during China’s post-reform era? This article explains the puzzle by exploiting the heterogeneity in structural-change patterns across Chinese provinces. Using an original database covering production and factor inputs in 8 sectors and 31 provinces over 1993–2016, I show only those provinces where labour was reallocated from agriculture to manufacturing and services benefited from a structural bonus on labour productivity growth. In the other provinces, this structural-change effect was minimal or negative. Regarding the structural-change effect on total factor productivity (TFP) growth, I find both labour and capital reallocation played a limited role. Labour reallocation has little potential in boosting aggregate TFP growth, as marginal labour returns are similar across sectors. Capital reallocation has a far greater potential but remains restrained, suggesting substantial reallocation frictions. China’s TFP growth is mostly explained by within-sector technological progress, which has been dissipating since 2008, leading to declining TFP growth.
[Keywords] China, Factor Reallocation, Productivity Growth, Provincial Disparities, Structural Change
[Abstract] This paper quantifies the roles of classical trade determinants in shaping the sectoral specialization patterns across Chinese provinces. It constructs a panel database covering factor inputs and production disaggregated across 32 sectors in 31 provinces from 1993 to 2016. Empirical measures of specialization and classical trade determinants are constructed based on a partial equilibrium model, explaining provincial specialization across multi-sectors by both Ricardian and Heckscher-Ohlin (HO) predictions. Empirical evidence indicates that provincial specialization is primarily driven by Ricardian TFP advantage rather than by HO endowment condition. Moreover, the Ricardian effect is stronger than the inertia effect in structural transition, implying that regional specialization in China is self-adjusting rather than path-dependent.
[Keywords] China, Structural Change, Regional Specialization, Comparative Advantage, Factor Endowments
[Abstract] This paper examines the impact of structural change on income convergence across Chinese provinces from 1993 to 2016. Using a simple model that decomposes income per capita growth into three components—the withinsector TFP growth rate, capital deepening, and cross-sector reallocation effects of labor and capital (i.e., structural change)—we quantify the contribution of each factor to the income convergence process among Chinese provinces. Three main findings emerge. First, we find evidence of both unconditional convergence (between Chinese provinces) and conditional convergence (within each province). Yet, unconditional convergence occurs at a much slower pace than conditional convergence. Second, structural change plays a significant role in the catch-up process. Productive labor reallocation enhances convergence, especially within provinces. In particular, reducing the agricultural employment share promotes the catch-up process, especially the unconditional one, particularly when it is accompanied by an increase in the manufacturing employment share. In contrast, reallocating workers to the service sector does not facilitate sustained growth or catch-up. Third, and unlike structural change, within-sector TFP growth hinders the catch-up process, both unconditionally and conditionally. These findings offer important policy implications for achieving a more balanced growth trajectory in China.
[Keywords] China, Structural Change, Income Growth, Barro Convergence, Regional Inequality