Working Paper: NBER ID: w12943
Authors: Barry Bosworth; Susan M. Collins
Abstract: We compare the recent economic performances of China and India using a simple growth accounting framework that produces estimates of the contribution of labor, capital, education, and total factor productivity for the three sectors of agriculture, industry, and services as well as for the aggregate economy. Our analysis incorporates recent data revisions in both countries and includes extensive discussion of the underlying data series. The growth accounts show a roughly equal division in each country between the contributions of capital accumulation and TFP to growth in output per worker over the period 1978-2004, and an acceleration of growth when the period is divided at 1993. However, the magnitude of output growth in China is roughly double that of India at the aggregate level, and also higher in each of the three sectors in both sub-periods. In China the post-1993 acceleration was concentrated mostly in industry, which contributed nearly 60 percent of China's aggregate productivity growth. In contrast, 45 percent of the growth in India in the second sub-period came in services. Reallocation of workers from agriculture to industry and services has contributed 1.2 percentage points to productivity growth in each country.
Keywords: Economic Growth; China; India; Growth Accounting
JEL Codes: F43; O1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capital accumulation (E22) | economic growth (O49) |
| total factor productivity (TFP) (D24) | economic growth (O49) |
| output growth in China (O49) | output growth in India (O40) |
| reallocation of workers from agriculture to industry and services (J68) | productivity growth (O49) |
| growth in output per worker (O40) | increased capital per worker (E22) |
| growth in output per worker (O40) | gains in TFP (O49) |
| institutional reforms in agriculture (P32) | growth of China's agricultural sector (Q11) |
| China's industrial sector (L61) | China's GDP (P24) |
| India’s service sector growth (O14) | output growth acceleration after 1993 (O49) |