Total Factor Productivity and China's Miraculous Growth : An Empirical Analysis

This paper examines the role of total factor productivity (TFP) in China’s miraculous growth during 1997-2012 and reports that 16% of the GDP growth is driven by the TFP growth, dominated by technological progress. The TFP growth varies significantly across regions and is positively influenced by human capital, innovations and import of machinery, and negatively affected by financial development and exports with little influence from FDI, infrastructure and market competition. It also reports tentative evidence for a weak spillover effect of FDI conditional on the level of financial development and a negative counteractive effect of import of machinery and human capital