Misallocation and manufacturing TFP in China and India

Tai Hsieh Chang and Pete Klenow

MPRA Paper from University Library of Munich, Germany

Abstract: Resource misallocation can lower aggregate total factor productivity (TFP).We use microdata on manufacturing establishments to quantify the potential extent of misallocation in China and India versus the United States. We measure sizable gaps in marginal products of labor and capital across plants within narrowly defined industries in China and India compared with the United States. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the United States, we calculate manufacturing TFP gains of 30%–50% in China and 40%–60% in India.

Keywords: India; China; Economy (search for similar items in EconPapers)
JEL-codes: A10 A20 A3 A30 B0 B2 C0 C4 C5 C6 D0 D1 D2 D3 D4 F1 (search for similar items in EconPapers)
Date: 2007-06-30, Revised 2007-06-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (80)

Published in The Quaterly Journal Of Economics 1.1(2007): pp. 1403-1447

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Related works:
Journal Article: Misallocation and Manufacturing TFP in China and India (2009)
Working Paper: Misallocation and Manufacturing TFP in China and India (2009)
Working Paper: Misallocation and Manufacturing TFP in China and India (2008)
Working Paper: Misallocation and Manufacturing TFP in China and India (2007)
Working Paper: Misallocation and Manufacturing TFP in China and India (2007)
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