On nonparametric estimation for the growth of total factor productivity: A study on china and its four eastern provinces

Abstract

A nonparametric approach is applied in the paper to study sources of economic growth in China and its four eastern provinces. The nonparametric approach loosens the restrictive assumptions such as the particular form of the underlying aggregate production function and the perfect competitiveness of factor markets compared with the conventional method. The study finds out some innovative results. First, the conventional method shows that inadaptability to China`s economy because it doesn`t follow the law of constant return. Second, the growth rate of total factor productivity (TFP) increases along with time and the contribution of TFP growth rates to GDP growth shows the technical progress plays a remarkable role in the studied economic growth. Third, labor-intensive industry is still the main drive of economic growth in Zhejiang and Guangdong, which is implied by their output elasticities of labor.