Title

Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing

Document Type

Journal article

Source Publication

Journal of Development Economics

Publication Date

3-1-2012

Volume

97

Issue

2

First Page

339

Last Page

351

Keywords

TFP, Industrial development, Reallocation, Entry, Exit, China

Abstract

We present the first comprehensive set of firm-level total factor productivity (TFP) estimates for China's manufacturing sector that spans China's entry into the WTO. For our preferred estimate, which adjusts for a number of potential sources of measurement error and bias, the weighted average annual productivity growth for incumbents is 2.85% for a gross output production function and 7.96% for a value added production function over the period 1998–2007. This is among the highest compared to other countries. Productivity growth at the industry level is even higher, reflecting the dynamic force of creative destruction. Over the entire period, net entry accounts for over two thirds of total TFP growth. In contrast to earlier studies looking at total non-agriculture including services, we find that TFP growth dominates input accumulation as a source of output growth.

DOI

10.1016/j.jdeveco.2011.02.002

Print ISSN

03043878

E-ISSN

18726089

Publisher Statement

Copyright © 2011 Elsevier B.V.

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Brandt, L., Biesebroeck, J. V., & Zhang, Y. (2012). Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing. Journal of Development Economics, 97(2), 339-351. doi: 10.1016/j.jdeveco.2011.02.002