ECN 310 China’s GDP Growth Decomposition: 1952-2005. Economics Essay

China’s GDP Growth Decomposition: 1952-2005
Name
ECN 310
Mengxiao Liu
Date
China’s GDP growth rates 1952-2005
Period

GDP growth

Fixed Capital

Labor

Human capital

TFP

1955-1965

3.8%

5.2%

1.4%

2.0%

0.4%

1966-1976

4.2%

7.5%

2.4%

3.1%

-0.8%

1978-1990

8.9%

8.3%

3.0%

3.9%

3.2%

1991-1999

10.6%

10.4%

1.1%

1.7%

5.1%

2000-2005

9.5%

12.6%

1.0%

1.8%

3.1%


Contribution to Measured GDP Growth from


Period

Fixed Capital

Labor

Human capital

TFP

1952-1978

54.09

0.00

31.04

14.87

1952-1957

12.78

0.00

14.84

72.38

1957-1978

69.39

0.00

37.04

-6.43

1978-2005

43.69

0.00

16.20

40.10

1978-1995

37.52

0.00

19.27

43.20

1995-2005

55.01

0.00

10.57

34.42


Contribution to Measured GDP Growth from


Period

Fixed Capital

Labor

Human capital

TFP

1955-1965

59.76

0.00

30.88

9.36

1966-1976

77.08

0.00

41.53

-18.61

1978-1990

39.81

0.00

24.65

35.53

1991-1999

42.45

0.00

9.32

48.23

2000-2005

57.10

0.00

10.62

32.28

1955-1965
The economy grew by 3.8% in 1955-1965 and the TFP by 0.4%. The end of the Civil War in 1950 with the victory of the Communist Party under Mao Zedong influenced the economic system and government in the People's Republic China (PRC). Mao drew inspiration from the Soviet model, and carried out the collectivization and launched the first five-year plan, which consisted of implementing the first five-year plan, and consisted implementing a cooperative system in agriculture. There was forced public spending and the agriculture sector, while the economy had been in turmoil before 1952 because of war and political upheaval.
Mao ruled country that largely rural, poorly industrialized, poor and the agriculture system was poorly maintained. Members of the Communist Party of China (CPC) were intent n rapid industrialization of the country and imitated the economic policies from the Soviet Union (USSR). The second five-year plan or the Great Leap Forward (1958-1962) was designed to make changes in the party with economic, political and social spheres of life there was focus on taking g advantage of the country’s huge human capital, at a time when there was low fixed capital to industrialize the country and reform agriculture. There were changes as there was increase in the agricultural production, but Mao abolished private property and followed a model of communes in the rural areas (Du, Wang & Wu, 2014). From 1961, there were small changes to deal with the problems brought about by the Great Leap Forward, which caused famine, where there small local private markets that allowed the farmers to sell some products that they harvested in their small plots.
1966-1976
During 1966-1976 and GDP growth rate and TPF were 4.2% and -0.8% respectively. The failure of the Great Leap Forward resulted in the Cultural Revolution (1966-1976), where Mao expelled members of the party, mostly moderates and those who challenged his policies. Mao Zedong and Deng Xiaoping the future leader of the People's Republic of China after Mao’s death had policy disagreements, as Mao believed in implementing a fully socialist model that was rigid based on central planning. Even with reforms the country’s agricultural sector would not recover until 1978.Efforts to industrialize and advance economically failed since organization of the peasants in militarized communes had failed to bring rapid changes
The Cultural Revolution was more political that the Great Leap Forward, which focused on economic improvement, and disrupting during 1966-1976 affected productivity negatively. The communist party leaders tried to ...