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Why has China Grown so Fast? The Role of Structural Change

Author

Listed:
  • John Knight
  • Sai Ding
Abstract
In this paper we attempt to explore some indirect determinants of China's growth success including the degree of openness, institutional change and sectoral change, based on a cross-province dataset. The methodology we adopt is the informal growth regression, which permits the introduction of some explanatory variables that represent the underlying as well as the proximate causes of growth. We first address the problem of model uncertainty by adopting two approaches to model selection, BMA and GETS, to consider a wide range of candidate predictors of growth in China. Then variables flagged as being important by these procedures are used in formulating our models, in which the contribution of factors behind the proximate determinants are examined in some detail using panel data system GMM. All three forms of structural change - relative expansion of the trade sector, of the private sector, and of the non-agricultural sector - are found to raise the growth rate. Moreover, structural change in all three dimensions was rapid over the study period. Each change primarily represents an improvement in the efficiency of the economy, moving it towards its production frontier. We conclude that such improvements in productive efficiency have been an important part of the explanation for China's remarkable rate of growth.

Suggested Citation

  • John Knight & Sai Ding, 2008. "Why has China Grown so Fast? The Role of Structural Change," Economics Series Working Papers 415, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:415
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    Cited by:

    1. Jinzhao Chen, 2015. "Interprovincial Competitiveness and Economic Growth: Evidence from Chinese Provincial Data (1992–2008)," Pacific Economic Review, Wiley Blackwell, vol. 20(3), pages 388-414, August.
    2. Sai Ding & John Knight, 2011. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 141-174, April.
    3. Sai Ding & John Knight & Xiao Zhang, 2019. "Does China overinvest? Evidence from a panel of Chinese firms," The European Journal of Finance, Taylor & Francis Journals, vol. 25(6), pages 489-507, April.
    4. repec:uto:dipeco:201432 is not listed on IDEAS
    5. Wei Chi & Xiaoye Qian, 2010. "The role of education in regional innovation activities: spatial evidence from China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 15(4), pages 396-419.
    6. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    7. Ding Lu, 2011. "Transition of China’s growth pattern," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(4), pages 535-555, December.
    8. Vittorio Valli & Donatella Saccone, 2015. "Structural Change, Globalization and Economic Growth in China and India," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 133-163, December.
    9. Ofei, Edmund Okraku, 2020. "Endogenous Technological Change Model and Economic Growth in China: A Firm-Level Analysis," MPRA Paper 117113, University Library of Munich, Germany.
    10. Chi, Wei & Qian, Xiaoye, 2009. "The role of education in regional innovation activities and economic growth: spatial evidence from China," MPRA Paper 15779, University Library of Munich, Germany.
    11. Minzhe Du & Bing Wang & Yanrui Wu, 2014. "Sources of China’s Economic Growth: An Empirical Analysis Based on the BML Index with Green Growth Accounting," Sustainability, MDPI, vol. 6(9), pages 1-22, September.
    12. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    13. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.
    14. Larisa Luchian (Mocanu) & Irina Ionescu, 2016. "An Analysis On China’S Economical Growth Perspectives," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 53-66, July.
    15. repec:zbw:bofitp:2011_015 is not listed on IDEAS
    16. John Knight & Sai Ding, 2010. "Why Does China Invest So Much?," Asian Economic Papers, MIT Press, vol. 9(3), pages 87-117, Fall.
    17. Chen, Xiang & Lu, Ching-Cheng, 2021. "The impact of the macroeconomic factors in the bank efficiency: Evidence from the Chinese city banks," The North American Journal of Economics and Finance, Elsevier, vol. 55(C).

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    More about this item

    Keywords

    Economic Growth; Structural Change; Openness; Institutional Change; China;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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