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The People’s Republic of China’s Long-Run Growth through the Lens of the Export-Led Growth Model

dc.contributor.authorJesus Felipe
dc.contributor.authorMatteo Lanzafame
dc.identifier.issn2313-6537 (print)
dc.identifier.issn2313-6545 (electronic)
dc.description.abstractThe People’s Republic of China’s (PRC) remarkable growth performance over the last 3 decades has been associated to very robust export growth, so much so that many refer to it as a clear example of export-led growth (ELG). Using the concept of the balance-of-payments equilibrium (BOPE) growth rate, which provides a framework to test the ELG hypothesis, we show that the PRC’s actual long-run growth is well approximated by its BOPE growth rate. This growth rate is given by the ratio of the growth rate of exports to the income elasticity of imports. We estimate the latter using the Kalman filter, which allows us to obtain a time-varying estimate of the PRC’s BOPE growth rate. We find that the average value of the PRC’s BOPE growth rate during 1981–2016 was 11%, but it varied significantly over time and declined notably after 2007. Today, it is estimated at a much lower 5.9%. We then discuss the determinants of the PRC’s BOPE growth rate and of the income elasticity of imports, with the help of the Bayesian model averaging technique. The analysis highlights the role of the composition of aggregate demand as the main driving force, both for its direct effects on the income elasticity of imports, and for the indirect effects on export growth via capital accumulation, in particular fixed asset investment. Our analysis has important implications to understand the PRC’s transition to a “New Normal” of a lower growth rate.
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.titleThe People’s Republic of China’s Long-Run Growth through the Lens of the Export-Led Growth Model
dc.typeWorking Papers
dc.subject.expertFree Trade
dc.subject.expertTrade Facilitation
dc.subject.expertEconomic integration
dc.subject.expertRegional Economic Integration
dc.subject.expertIntraregional Trade
dc.subject.expertMacroeconomic Analysis
dc.subject.expertMacroeconomic Framework
dc.subject.expertMacroeconomic Models
dc.subject.expertMacroeconomic Performance
dc.subject.expertMacroeconomic Planning
dc.subject.expertMacroeconomic Policies
dc.subject.expertMacroeconomic Reform
dc.subject.expertMacroeconomic Stabilization
dc.subject.adbEconomic planning
dc.subject.adbEconomic structure
dc.subject.adbGrowth policy
dc.subject.adbTrade relations
dc.subject.adbTrade policy
dc.subject.adbTrade policy
dc.subject.adbEconomic development
dc.subject.adbEconomies in transition
dc.subject.adbInternational economy
dc.subject.adbBorder integration
dc.subject.adbEconomic integration
dc.subject.adbGross domestic product
dc.subject.naturalRegional economics
dc.subject.naturalEconomic forecasting
dc.subject.naturalEconomic development projects
dc.subject.naturalSuccess in business
dc.subject.naturalFree trade
dc.subject.naturalCommunication in economic development
dc.subject.naturalRestraint of trade
dc.subject.naturalInternational economic integration
dc.subject.naturalTrade blocs
dc.title.seriesADB Economics Working Paper Series
dc.title.volumeNo. 555
dc.contributor.imprintAsian Development Bank
oar.adminregionEast Asia Region
oar.countryPeople's Republic of China
oar.authorFelipe, Jesus
oar.authorLanzafame, Matteo

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