NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Global View of Productivity Growth in China

Chang-Tai Hsieh, Ralph Ossa

NBER Working Paper No. 16778
Issued in February 2011
NBER Program(s):   IFM   ITI   PR

How does a country's productivity growth affect worldwide real incomes through international trade? In this paper, we take this classic question to the data by measuring the spillover effects of China's productivity growth. Our framework features traditional terms-of-trade effects and new trade home market effects as suggested by the theoretical literature and works from a reference point which perfectly matches industry-level trade. Focusing on the years 1995 to 2007, we find that the cumulative welfare effect on individual regions ranges between -1.2 percent and 3.6 percent and only 3.0 percent of the worldwide gains of China's productivity growth accrue to the rest of the world.

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This paper was revised on October 27, 2011

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Document Object Identifier (DOI): 10.3386/w16778

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