Input–Output-Based Genuine Value Added and Genuine Productivity in China’s Industrial Sectors (1995-2010)

Discussion Papers


by Yuning GAO, Yunfeng ZHENG, Angang HU, Bo MENG

February 2015


The rapid growth of China’s economy has brought about huge losses of natural capital in the form of natural resource depletion and damages from carbon emissions. This paper recalculates value added, capital formation, capital stock, and related multifactor productivity in China’s industrial sectors by further developing the genuine savings method of the World Bank. The sector-level natural capital loss was calculated using China’s official input–output table and their extensions for tracing final consumers. The capital output elasticity in the productivity estimation was adjusted based on these tables. The results show that although the loss of natural capital in China’s industrial sectors in terms of value added has slowed, the impacts on their productivity during the past decades is still quite clear.

Keywords: Genuine savings method, Total factor productivity, Input–output method, China
JEL classification: C67, E01, O4

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