We construct a growth model consistent with China's economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but due to financial imperfections they must finance investments through internal savings. State-owned firms have low productivity but survive because of better access to credit markets. High-productivity firms outgrow low-productivity firms if entrepreneurs have sufficiently high savings. The downsizing of financially integrated firms forces domestic savings to be invested abroad, generating a foreign surplus. A calibrated version of the theory accounts quantitatively for China's economic transition.
%0 Journal Article
%1 Song:2011:0002-8282:196
%A Song, Zheng
%A Storesletten, Kjetil
%A Zilibotti, Fabrizio
%D 2011
%J The American Economic Review
%K capital_market frictions growth macro olg
%N 1
%P 196-233
%R 10.1257/aer.101.1.196
%T Growing Like China
%U http://www.ingentaconnect.com/content/aea/aer/2011/00000101/00000001/art00011
%V 101
%X We construct a growth model consistent with China's economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but due to financial imperfections they must finance investments through internal savings. State-owned firms have low productivity but survive because of better access to credit markets. High-productivity firms outgrow low-productivity firms if entrepreneurs have sufficiently high savings. The downsizing of financially integrated firms forces domestic savings to be invested abroad, generating a foreign surplus. A calibrated version of the theory accounts quantitatively for China's economic transition.
@article{Song:2011:0002-8282:196,
abstract = {We construct a growth model consistent with China's economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but due to financial imperfections they must finance investments through internal savings. State-owned firms have low productivity but survive because of better access to credit markets. High-productivity firms outgrow low-productivity firms if entrepreneurs have sufficiently high savings. The downsizing of financially integrated firms forces domestic savings to be invested abroad, generating a foreign surplus. A calibrated version of the theory accounts quantitatively for China's economic transition.},
added-at = {2013-03-07T09:53:50.000+0100},
author = {Song, Zheng and Storesletten, Kjetil and Zilibotti, Fabrizio},
biburl = {https://www.bibsonomy.org/bibtex/243258da2bf9dd632a35dcd35855d9761/jp},
description = {ingentaconnect Growing Like China},
doi = {10.1257/aer.101.1.196},
interhash = {2b3a77c1f730d50f1b17473b1d876269},
intrahash = {43258da2bf9dd632a35dcd35855d9761},
journal = {The American Economic Review},
keywords = {capital_market frictions growth macro olg},
number = 1,
pages = {196-233},
timestamp = {2013-03-07T09:53:50.000+0100},
title = {Growing Like China},
url = {http://www.ingentaconnect.com/content/aea/aer/2011/00000101/00000001/art00011},
volume = 101,
year = 2011
}