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China in the Global Economy

Edited by P. J. Lloyd and Xiao-guang Zhang

China in the Global Economy focuses on the theme of twin transitions occurring in the Chinese economy: the transition from a centrally planned economic system to a market oriented one, and from an agrarian to a modern industrialised society. China’s exporters face unprecedented competition in the world market and the flow of foreign direct investment has fallen restraining the growth of the domestic economy. These new challenges have fuelled debate on the perspective of the Chinese economy and its role in the global economy.
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Chapter 6: The long-run comparative labour productivity performance of Chinese and US manufacturing, 1952–97

Harry X. Wu


Harry X. Wu* INTRODUCTION Catch-up theory argues that countries at low levels of income have a potentiality for a faster productivity advance than countries at high levels of income since they can use the stock of technology already developed by more advanced economies. However, the realization of catch-up is not guaranteed. It depends primarily on two factors, namely social capability and technological congruence, where the former refers to the availability of an institutional framework, the capability of government for policy-making and political backing, and the human capital (technological and skill) level of the population, and the latter refers to the capability to adopt Western technology (Abramovitz 1989). Studies focusing on detailed sectoral productivity comparison with the world’s productivity leader, the United States, using the industry-of-origin (production) purchasing power parity (PPP) approach, have found that the post-war Japanese, South Korean and Taiwanese economies experienced significant catch-up (Pilat 1994; Timmer and Szirmai 1997). Compared with these economies, it is unquestionable that the post-war Chinese economy differs distinctly in social and economic setting and has experienced radical, and sometimes (before the 1980s) very damaging, policy shifts. We may then ask: compared with the leading economy in the world, has the Chinese economy, whose leader vowed in the 1950s to overtake the West in two decades, experienced any significant catch-up or a process of falling behind? This is obviously an important question for China in its striving for economic development in the twenty-first century. Understanding the Chinese economy’s comparative performance is...

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