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Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the extent of this misallocation in China and India compared to the U.S. in recent years. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 25-40% in China and 50-60% in India.
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Industrial productivity, Mathematical modelsShowing 2 featured editions. View all 2 editions?
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Misallocation and manufacturing TFP in China and India
2007, National Bureau of Economic Research
in English
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Misallocation and manufacturing tfp in china and india
2007, National Bureau of Economic Research
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Book Details
Edition Notes
"August 2007"
Includes bibliographical references (p. 45-47).
Also available in PDF from the NBER World Wide Web site (www.nber.org).
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- Created September 29, 2008
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