Working Paper: NBER ID: w18405
Authors: Charles R. Hulten; Janet X. Hao
Abstract: Investment in a broad array of intangible capital - R&D, organizational capital, worker training, and brand equity - has occurred in many of the most advanced world economies and has been found to be an important source of economic growth. This evidence suggests that intangible capital formation may play an important role in China's reform-driven transformation to a more market-oriented open economy. Though the literature on intangible capital is expanding, there has as yet been no general assessment of its role in China's rapid economic growth. This paper seeks to fill this gap by estimating how much intangible investment has taken place there over the last two decades. The importance of this capital as a driver of China's recent growth is then assessed using a growth accounting framework, and the results compared to similar findings for the U.S., Japan, the U.K., Germany, France, Italy, and Spain, as well as Japan during its high growth period. The paper also looks beyond the growth accounting framework to the role of saving rates and long-run convergence in shaping longer-term growth prospects. It also focuses on the problem of accurate economic measurement in an economy undergoing rapid transformation.
Keywords: Intangible Capital; Economic Growth; China; Growth Accounting
JEL Codes: O11; O30; O47; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Intangible capital formation (E22) | Economic growth (O00) |
| Investments in intangible capital (E22) | Intangible capital formation (E22) |
| Intangible investment (E22) | Economic growth (O49) |
| Tangible capital growth (E22) | Economic growth (O49) |
| Economic growth (O49) | Sustainability of high growth rates (O44) |