Growth, Development, and Structural Change at the Firm-Level: The Example of the PR China

49 Pages Posted: 27 Feb 2021

See all articles by Torsten Heinrich

Torsten Heinrich

Faculty for Economics and Business Administration, Chemnitz University of Technology, 09111 Chemnitz, Germany; University of Oxford - Institute for New Economic Thinking at the Oxford Martin School; Oxford Martin Programme on Technological and Economic Change, Oxford Martin School, University of Oxford

Jangho Yang

INET & Oxford Martin School; University of Waterloo

Shuanping Dai

University of Duisburg-Essen - Mercator School of Management

Date Written: December 28, 2020

Abstract

Understanding the microeconomic details of technological catch-up processes offers great potential for informing both innovation economics and development policy. We study the economic transition of the PR China from an agrarian country to a high-tech economy as one example for such a case. It is clear from past literature that rapidly rising productivity levels played a crucial role. However, the distribution of labor productivity in Chinese firms has not been comprehensively investigated and it remains an open question if this can be used to guide economic development. We analyze labor productivity and the dynamic change of labor productivity in firm-level data for the years 1998-2013 from the Chinese Industrial Enterprise Database. We demonstrate that both variables are conveniently modeled as Lévy alpha-stable distributions, provide parameter estimates and analyze dynamic changes to this distribution. We find that the productivity gains were not due to super-star firms, but due to a systematic shift of the entire distribution with otherwise mostly unchanged characteristics. We also found an emerging right-skew in the distribution of labor productivity change. While there are significant differences between the 31 provinces and autonomous regions of the P.R. China, we also show that there are systematic relations between micro-level and province-level variables. We conclude with some implications of these findings for development policy.

Keywords: structural change; China; labor productivity; heavy-tailed distributions; microdata

JEL Classification: J24, L11, O10, O3, O53, R12

Suggested Citation

Heinrich, Torsten and Yang, Jangho and Yang, Jangho and Dai, Shuanping, Growth, Development, and Structural Change at the Firm-Level: The Example of the PR China (December 28, 2020). Available at SSRN: https://ssrn.com/abstract=3756558 or http://dx.doi.org/10.2139/ssrn.3756558

Torsten Heinrich (Contact Author)

Faculty for Economics and Business Administration, Chemnitz University of Technology, 09111 Chemnitz, Germany ( email )

D-09107 Chemnitz
Germany

HOME PAGE: http://https://www.tu-chemnitz.de/wirtschaft/vwl2/personal/heinrich.php.en

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

Oxford Martin Programme on Technological and Economic Change, Oxford Martin School, University of Oxford ( email )

University of Oxford
34 Broad Street
Oxford, OX1 3BD
United Kingdom

Jangho Yang

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

INET & Oxford Martin School ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Shuanping Dai

University of Duisburg-Essen - Mercator School of Management ( email )

Lotharstraße 65
Duisburg, Nordrhein-Westfalen 47057
Germany

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