Abstract：Total factor productivity (TFP) growth is a very important contributor to economic growth, in addition to capital and labor inputs. In order to estimate the contribution of TFP growth to economic growth more precisely, this study employs a variable elasticity production function which estimates the output elasticity of factor inputs dynamically. We used fixed and variable elasticity production function models as well as the "Solow residual method" to compute the contributions of factor inputs and TFP to China’s economic growth in the period of 1978-2012. The empirical results show that the contribution of TFP growth to economic growth exceeded 30% from 1978-2012. However, after 2008 the contribution of investment to economic growth increase rapidly, while the contribution TFP growth fell to an average of only 18%.
Full report :Measuring TFP Contribution to Economic Growth in China .pdf
