Vol. 6 Num. 1 - GCG: Revista de Globalización, Competitividad y ...

Why isn’t Mexico on China’s Growth Path?98difference between the actual and the estimated levels of capital per worker in the first yearobtained with Equation 5 quickly becomes less important over time.Table 1 contains estimates of y ˆ ,(αˆ k ), (1 − α) h ˆ , and A ˆ , where the growth rate of productivityis estimated as a residual based on equation 3. All variables are measured as annual averagegrowth rates over five-year periods 9 . Looking first at China, the data show a strongbifurcation between the pre-reform period and the post-reform years, as expected. Therate of growth of output per worker jumps significantly (see also Figure 3), as does the rateof growth of TFP. Prior to the reforms, growth of GDP per worker was respectable, but afterwardsit becomes remarkable. Growth in the pre-reform period, however, was due primarilyto the accumulation of capital and labor skills rather than an efficiency increase in the useof inputs. Post-reform, TFP growth becomes a major contributor to overall labor productivity(output per worker), even as the growth rate of capital per worker increases.Table 1: Rates of change of y, k, h, and AChina y hat k hat h hat A hat1955-1960 4.05 5.36 4.56 -0.781960-1965 0.76 -0.65 4.02 -1.631965-1970 1.82 2.09 4.31 -1.711970-1975 1.95 3.84 2.93 -1.291975-1980 3.62 4.50 3.67 -0.331980-1985 4.56 4.68 2.02 1.601985-1990 4.09 5.62 1.40 1.221990-1995 10.04 7.53 2.64 5.691995-2000 7.00 8.24 2.09 2.752000-2005 8.09 8.44 1.41 4.22Mexico y hat k hat h hat A hat1955-1960 3.79 3.53 1.30 1.711960-1965 3.91 3.61 2.74 0.861965-1970 3.12 4.44 2.34 0.041970-1975 0.29 2.32 3.13 -2.551975-1980 3.20 2.88 3.36 -0.491980-1985 2.28 2.49 3.22 -0.681985-1990 -1.63 -0.35 2.23 -2.961990-1995 -5.70 -0.65 2.13 -6.861995-2000 3.37 0.20 1.38 2.412000-2005 -0.13 0.42 1.96 -1.55Source: Author’s calculations based Heston, Summers, Aten (2009) and Barro and Lee (2010).9. Capital’s share of the output, α, is assumed to be 0.35, which is a standard assumption in growth accounting exercises based on a large numberof empirical estimates for different countries. Different values were assigned to α in order to check for robustness in the estimates; there was littlequantitative impact within any range of reasonable estimates.GCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 91-106