Misallocation and manufacturing TFP in China and India
By: Chang-Tai Hsieh, Peter J. Klenow.
Contributors: Klenow, Peter J.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13290.; Working paper series (National Bureau of Economic Research) -- working paper no. 13290.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 47
Subjects: Industrial productivity -- China -- Mathematical models; Industrial productivity -- India -- Mathematical models
Description: Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the extent of this misallocation in China and India compared to the U.S. in recent years. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 25-40% in China and 50-60% in India.
Notes: "August 2007"

Includes bibliographical references (p. 45-47).

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