Accounting for Growth: Comparing China and India

Abstract

Since 1980, China and India have achieved remarkable rates of economic growth and poverty reduction. The emergence of China and India as major forces in the global economy has been one of the most significant economic developments of the past quarter century. This paper examines sources of economic growth in the two countries, comparing and contrasting their experiences over the past 25 years. In this paper, we investigate patterns of economic growth for China and India by constructing growth accounts that uncover the supply-side sources of output change for each economy. Some of the results confirm themes that have emerged from the prior literature on the economic development of the two countries, however, some new findings emerge as well. In addition to decompositions of aggregate growth, we construct separate accounts for the three major economic sectors: agriculture; industry; and services. This level of detail enables us to highlight key differences in the development paths taken by China and India. In conclusion, we assess the prospects for future growth in each country.

Exploring the link between research and economic growth: an empirical study of China and USA

“…First, the estimated capital share for both countries are different from the stylized value of one-third which is due to a couple of reasons: when (a) the capital and labor inputs tend to grow at relatively similar rates; (b) an economy is predominantly developing and hence a large number of self-employed persons earn income from both capital and their own labor (Gollin 2002) thus making it difficult to obtain meaningful measures of income shares; and (c) the quality and availability of data is weak and therefore making it difficult to compute or estimate the capital stock per worker (Bosworth and Collins 2008) that can perfectly exhibit decreasing returns to scale and conform to a desirable steady-state convergence process. We concur to all these reasons in case of this study.…”

Comparisons of agricultural productivity growth in China and India

“…We conclude highlighting the two main factors that appear to explain differences in agricultural growth between China and India as derived from the analysis of structural change in the agricultural TFP series of these countries. First, even though both China and India benefited from the Green Revolution, agricultural growth in China also benefited from more fundamental institutional reforms in agriculture: the restoration of family farms in the late 1970s and the movement of large numbers of workers into rural enterprises, the devolution of fiscal and administrative powers to local governments, and the steady introduction of market incentives (Bosworth and Collins 2008). These changes boosted production efficiency and had larger effect than the liberalization measures that followed after 1984, becoming the major explanation of the improved performance of the agricultural sector.…”

Technology capital: the price of admission to the growth club

“…These also show mixed results regarding long-run trends. In a comparison of economic growth between India and China between 1978Bosworth and Collins (2008, show a decline in Indian agricultural TFP after 1993 while China's remained roughly constant. Fuglie (2004) found evidence of rapid TFP growth in Indonesian agriculture during the 1970s followed by stagnation in the 1990s.…”