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Equipment investment, output and productivity in China

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Abstract

At the beginning of the 1990s, J. Bradford De Long and Lawrence H. Summers highlighted in a series of influential articles that there were good reasons and quantitative evidence to support the point of view that machinery and equipment investment might be strongly associated with economic growth. China along with its enormous investment effort over recent decades constitutes an interesting case study with which to analyse the role played by equipment investment in its recent economic performance and its interaction with other sources of growth, i.e. openness, R&D, human capital and infrastructure. Our results provide evidence that equipment investment and exports are two of the most important determinants of both labour productivity and output in the long run even after controlling for other sources of growth in China. Furthermore, when human capital and infrastructure are included, the authors find that they have a positive effect on economic activity in the long run.

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  1. Department of Economics, Universitat Jaume I, Avda. Sos Baynat s/n, 12071, Castellón, Spain

    M. J. Herrerias

  2. Department of Economics and Institute of International Economics, Universitat Jaume I, Castellón, Spain

    Vicente Orts

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  1. M. J. Herrerias
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Herrerias, M.J., Orts, V. Equipment investment, output and productivity in China. Empir Econ 42, 181–207 (2012). https://doi.org/10.1007/s00181-010-0418-z

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