Sector-Level Productivity, Structural Change, and Rebalancing in China

November 27, 2013

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Format: Chicago

Malhar S Nabar, and Kai Yan. Sector-Level Productivity, Structural Change, and Rebalancing in China, (USA: International Monetary Fund, 2013) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper studies structural changes underlying China's remarkable and unprecedented growth in recent years. While patterns of structural transformation across China's provinces are broadly in line with international experience, one important difference is in labor productivity differentials between services and the rest of the economy. Specifically, the gap between labor productivity in the rest of the economy and services has widened across China's provinces as they have moved from low to middle income, which is contrary to the trend observed in cross-country experience. Evidence from a panel of China's provinces suggests that credit and labor market frictions have inhibited labor productivity growth in services relatively more than in the rest of the economy. Reducing these frictions is essential for achieving the next stage of China's development, one in which the service sector will need to play a more prominent role as an engine of growth. The evidence also suggests that improving labor productivity in services will lift the consumption share of GDP, thereby advancing the needed rebalancing of domestic demand in China.

Subject: Consumption, Economic sectors, Labor productivity, National accounts, Personal income, Production, Productivity, Services sector

Keywords: Asia and Pacific, China, Consumption, Employment ratio, Factor market, Interest rate, Labor productivity, Personal income, Productivity, Service productivity, Service sector, Service sector development, Service sector productivity, Service sector share, Services sector, Structural change, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/240
Stock No:

WPIEA2013240
ISBN:

9781475525854
ISSN:

1018-5941

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