A Survey of Total Factor Productivity and Technical Change in the Chinese Economy 1979-1996

Paper number: 99/01

Paper date: October 1998

Year: 1999

Paper Category: Discussion Paper

Authors

Qi Liang*

and

Garry D.A. Phillips
University of Exeter, School of Business and Economics
Exeter, UK

Abstract

This paper examines the growth of productivity and technical change in the rapid development of the Chinese economy since China opened its door to the world. Based on a study of available empirical evidence and relevant statistics, the paper argues that there has been remarkable technological progress in China in the period 1979-1996. The original source of that change was China's reform and openness policy. The important role played by foreign trade and foreign direct investment is highlighted. Also the paper suggests that high output growth was more affected by an increased input of resources than by technical change. It is argued that only by improving endogenous growth through increasing the rate of technical-intensive development will China sustain a growing economy.

* This work was completed while the first author was a visiting scholar at the School of Business and Economics, University of Exeter, as part of a British Council sponsored Exeter-Nanjing link project entitled "Aspects of Chinese Economics Development". Financial assistance from the British Council is gratefully acknowledged. The authors wish to thank Malcolm Macmillen for helpful comments.

JEL Classification Nos: O33, O47, O53
Keywords: Chinese economy, total factor productivity, technical change

Corresponding Author: Qi Liang, School of International Business, Nanjing University, Nanjing 210093, China; fax 86-25-3607691, email: zrz@netra.nju.edu.cn