the chinese growth trajectory from a post keynesian-structuralist-developmental perspective
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The Chinese growth trajectory from a Post Keynesian-Structuralist-Developmental
perspective
Roberto Alexandre Zanchetta Borghi – razb2@cam.ac.ukPhD Student, Centre of Development Studies
12th International Post Keynesian ConferenceSeptember 2014
Introduction
• China’s growth miracle: 10% a year over the last 30 years
• Which pattern has China followed? Does integration into international markets mean higher growth?
• Post Keynesian-Structuralist-Developmental framework to understand sustained trajectories of economic growth
• Aim of this paper: to offer an alternative perspective on China’s growth in the light of the Post Keynesian-Structuralist-Developmental framework
• National account data and input-output analysis to depict China’s major demand-supply transformations
Presentation Structure
• Section 1: the Post Keynesian-Structuralist-Developmental framework
• Section 2: input-output methodology
• Section 3: Chinese demand-supply transformations
1. Post Keynesian-Structuralist-Developmental framework
• (i) Central role played by demand, particularly investment:
• Demand as the primary inducement to produce
• Demand stimuli and multiplier effects
• Investment at the core of economic growth
• But prone to wide fluctuations
• State interventionism
1. Post Keynesian-Structuralist-Developmental framework
• (ii) Compatible response of supply to assure demand to be domestically effective (i.e. higher level of domestic economic activity with lower exposure to BoP growth constraints):
• Strengthening of interindustry linkages and consolidation of a diversified and integrated domestic productive structure
• Structural composition of supply between sectors: manufacturing growth-enhancing properties
• Dynamics of domestic and foreign supply
1. Post Keynesian-Structuralist-Developmental framework
• (iii) National policies to promote an international insertion that maintain and possibly upgrade the domestic productive structure with high investment levels:
• Infant industry argument and regulation of trade and capital flows
• Inward- / Outward-looking development strategy
• Economic openness is about how it has been promoted
• Exports as a source of necessary foreign exchange to assure imports for economic development
• Historical national account data: Chinese Statistical Yearbooks of the National Bureau of Statistics of China
• WIOD: 1995-2009 Chinese input-output tables
• 17-sectors industry-by-industry matrix:
• (1) Agricultural Commodities; (2) Mineral Commodities; (3) Food and Beverages; (4) Textiles and Footwear; (5) Refined Oil and Fuels; (6) Chemicals and Plastics; (7) Metals and Non-Metallic Minerals; (8) Machinery; (9) Electrical Equipments; (10) Transport Equipments; (11) Other Manufacturing Activities; (12) Utilities; (13) Construction; (14) Trade; (15) Transport and Food Services; (16) Financial Services and Real Estate; (17) Public Administration, Education and Health
2. Input-output methodology
• Input-output indicators:
• Output multipliers
• Generator of value-added decomposed by final demand components
• Hirschman-Rasmussen backward and forward linkages
• Normalised pure backward, forward and total linkages
• Fields of influence
• Trade coefficients (export, import penetration and imported input coefficients)
2. Input-output methodology
China – GDP annual growth rate by sector, 1978-2012 (%)
Source: author’s elaboration based on 2013 Chinese Statistical Yearbook.
3. Chinese demand-supply transformations
-2
0
2
4
6
8
10
12
14
16
18
20
22
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
GDP Primary Sector Secondary Sector Tertiary Sector
China – Contribution share by sector to the GDP growth, 1979-2012 (%)
Source: author’s elaboration based on 2013 Chinese Statistical Yearbook.Note: the sum of all three columns of each year equals 100%.
3. Chinese demand-supply transformations
-5
10
25
40
55
70
85
100
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Primary Sector Secondary Sector Tertiary Sector
China – GDP composition by expenditure, 1978-2012 (%)
Source: author’s elaboration based on 2013 Chinese Statistical Yearbook.
3. Chinese demand-supply transformations
-10
0
10
20
30
40
50
60
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Rural Household Consumption Urban Household Consumption Government Consumption
Gross Capital Formation Net Exports Total Household Consumption
China – Generator of value-added by final demand components, 1995-2009 (%)
Source: author’s elaboration based on WIOD Chinese tables.
3. Chinese demand-supply transformations
0
10
20
30
40
50
60
70
80
90
100
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Household consumption Government expenditure Investment Exports
China – Sectoral generator of value-added by final demand components, selected sectors, 1995-2009 (%)
Source: author’s elaboration based on WIOD Chinese tables.
3. Chinese demand-supply transformations
0
20
40
60
80
100Agr. Commod.
0
20
40
60
80
100Text. & Foot.
0
20
40
60
80
100Elect. Equip.
0
20
40
60
80
100Met. & Non-Met. Miner.
0
20
40
60
80
100Machinery
0
20
40
60
80
100
Construction
China – Hirschman-Rasmussen backward and forward linkages, average 1995-2009
Source: author’s elaboration based on WIOD Chinese tables.Note: circle size represents the output multiplier, so that the bigger the circle, the higher the multiplier.
3. Chinese demand-supply transformations
0.4
0.6
0.8
1.0
1.2
1.4
1.6
0.4 0.6 0.8 1.0 1.2 1.4 1.6
BL
FL
Mineral Commod.
Utilities
Ref. Oil & Fuels
Chem. & Plastics
Met. & Non-Met. M iner.
Other Manuf. Act.
TradeFin. Serv. & Real Estate
Transp. & Food Serv.
Agric. Commod.
Public Adm., Educ. & Health
Construction
Food & Beverages
Text. & Foot.
MachineryTransp. Equip.
Elect. Equip.
Dependent on interindustry supply
Dependent on interindustry demand
Generally dependent sectors
Relatively independent sectors
China – Normalised pure total linkages, selected years
Source: author’s elaboration based on WIOD Chinese tables.
3. Chinese demand-supply transformations
0.0
0.5
1.0
1.5
2.0
2.5
3.0C
onst
ruct
ion
Met
. & N
on-M
et. M
iner
.
Ele
ctric
al E
quip
.
Che
m. &
Pla
stic
s
Pub
lic A
dm.,
Edu
c. &
Hea
lth
Tra
nsp.
& F
ood
Ser
v.
Fin
. Ser
v. &
Rea
l Est
ate
Mac
hine
ry
Foo
d &
Bev
erag
es
Agr
ic. C
omm
od.
Tex
tiles
& F
ootw
ear
Tra
de
Tra
nspo
rt E
quip
.
Oth
er M
anuf
. Act
.
Util
ities
Min
eral
Com
mod
.
Ref
. Oil
& F
uels
1995 2000 2005 2009
China – Fields of influence, selected years
Source: author’s elaboration based on WIOD Chinese tables.
3. Chinese demand-supply transformations
Export Coefficient and Percentage Share of Exports by the Two Main
Export Sectors
Source: author’s elaboration based on WIOD Chinese tables.
3. Chinese demand-supply transformations
Imported Input Coefficient and Percentage Share of Imports by the
Two Main Import Sectors
0
5
10
15
20
25
30
35
40
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
% E
xpo
rts
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Exp
ort
Co
effi
cien
t
Text. & Foot. (% Exp) Elect. Equip. (% Exp)
Text. & Foot. (EC) Elect. Equip. (EC)
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
% Im
po
rts
for
Inte
rmed
iate
Co
nsu
mp
tio
n
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Imp
ort
ed In
pu
t C
oef
fici
ent
Met. & Non-Met. Miner. (% Imp) Elect. Equip. (% Imp)
Met. & Non-Met. Miner. (IIC) Elect. Equip. (IIC)
• Chinese economy: gradual integration into international markets
• Economic reforms according to Chinese needs
• Post-1978 economic growth: strong industry and services growth
• Domestic market as the main source of economic dynamism: profound changes in household consumption and high investment levels
• Consolidation of both highly investment-oriented and export-oriented sectors in the domestic productive structure
• Higher export levels enabling necessary imports, mostly directed to the productive process
• Chinese growth pattern understood as an investment-cum-foreign exchange growth with diversification and deeper integration of industrial production
Concluding remarks
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