New Estimates of China’s Infrastructure and NonInfrastructure Capital Stocks and Their Output Elasticities

Abstract:

This paper classifies total fixed capital into three categories, namely, economic infrastructure capital, social infrastructure capital and non-infrastructure capital, and then offers complete and detailed estimates of the national time series data (1981-2012) and the provincial panel data of 31 administrative regions (1997-2012). On this basis, this paper estimates the output elasticities of the three categories of capital and then tests whether or not the production function of China shows constant returns to scale.

Keywords:

金戈

economic infrastructure capital, social infrastructure capital, noninfrastructure capital, output elasticity

JEL Classification Code: E22, H54, C82

1. Introduction

Infrastructure represents the “wheels” of a country’s economic act ivi ty. In the world development report Infrastructure for Development, the World Bank (1994) extensively discussed the role of infrastructure in promoting economic development for various countries. According to an important study by Aschauer ( 1989) based on US experience, the output elasticity of public infrastructure capital to economic growth in the United States is as high as 0.39. Aschauer’s groundbreaking contribution ushered in a great deal of empirical researches including Munnell (1990a, 1990b), Finn (1993), Canning (1999), Wylie (1996), Zhang and Fan (2004), Kamps (2005), Straub et al. (2008), and Pereira and Andraz (2007, 2012). These studies have extensively investigated the relationship between infrastructure and economic growth in various countries.

China is a typical major developing country, where infrastructure plays a vital role in its economic growth. A lot of work has been done on the output and growth effects of infrastructure in China, including Ma et al. (2001), Fan et al. (2004a, 2004b), Guo and Jia (2006), Zong and Li (2006), Wang and Wang (2007), Liu and Hu (2010), Zhang et al. (2010), Zhang (2007, 2012),