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Title:How much does investment drive economic growth in China? PDF Logo
Authors:Qin, Duo
Cagas, Marie Anne
Quising, Pilipinas
He, Xinhua
Issue Date:2005
Series/Report no.:Working Paper, Department of Economics, Queen Mary, University of London 545
Abstract:Investment-driven growth has long been regarded as a key development strategy in China. This paper investigates empirically the validity of this view. Post-1990 data analyses and macroeconometric model simulations show that market demand has become a regular force in driving investment since reforms, that non-demand-driven investment growth contributes to increasing capital-output ratio far more than output growth, that government investment exerts a pivotal role in amplifying investment cycles, albeit effective in promoting employment, and that delayed and rising consumption from current investment surge can help sustain the impact of growth even with constant-returns-to-scale in the long-run GDP.
Subjects:Investment, Growth, Impulse response function, Cointegration, Granger non-causality
JEL:E22
E62
R34
O23
P41
Document Type:Working Paper
Appears in Collections:Working Paper Series, School of Economics and Finance, Queen Mary, University of London

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