The Role of Intangible Capital in the Transformation and Growth of the Chinese Economy

44 Pages Posted: 22 Sep 2012 Last revised: 16 Oct 2014

See all articles by Charles R. Hulten

Charles R. Hulten

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Xiaohui (Janet) Hao

The Conference Board

Date Written: September 2012

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.

Suggested Citation

Hulten, Charles R. and Hao, Xiaohui (Janet), The Role of Intangible Capital in the Transformation and Growth of the Chinese Economy (September 2012). NBER Working Paper No. w18405, Available at SSRN: https://ssrn.com/abstract=2150536

Charles R. Hulten (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Xiaohui (Janet) Hao

The Conference Board ( email )

845 Third Avenue
New York, NY 10022
United States

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