A Quantitative Analysis of China's Structural Transformation
Posted: 25 Sep 2009 Last revised: 9 Oct 2009
Date Written: September 24, 2009
The structural transformation of China - or the reallocation of resources from the agricultural sector to the nonagricultural sector - between 1978 and 2003 was truly remarkable. We develop a two-sector neoclassical growth model to quantitatively assess the driving forces of China's recent structural transformation. In addition to the forces currently emphasized in the literature - sectoral productivity growth - we show that China's transformation was accelerated significantly by the gradual reduction in the relative size of the Chinese government.
Keywords: Chinese economy, structural transformation, neoclassical growth model
JEL Classification: O41, O53
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