Comparison of Economic Growth Rates between China and America dependent on Solow Residual Analysis
Open Access
Author:
Perry, James
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Jonathan Eaton, Thesis Supervisor Russell Paul Chuderewicz, Thesis Honors Advisor
Keywords:
GDP Solow Residual Growth Rate China vs. US Total factor productivity solow model diminishing marginal returns time trend Chinese culture regression stata econometrics economics macroeconomics
Abstract:
China has touted one of the fastest-growing economies in the world over the past 50 years- and for good reason. The country’s GDP has grown from $5.972B produced in 1960 to $14.28T produced in 2019. Over the same yearly boundaries, the United States’ GDP has grown from $543B in 1960 to $21.43T in 2019 (World Bank). The issue that persists in this situation is that despite China’s initial GDP equaling approximately 1% of America’s initial GDP, China’s GDP has grown to about 66% of America’s current GDP. This paper analyses different reasons for the explosive nature observed in China’s economic growth through mathematical analysis of Solow model variables and the Solow residual. Measurements of subcategories under labor, capital, and technology growth are used in determining which variable has the largest effect on the growth in Total Factor Productivity.
