A Kaldorian Approach To The Factors Of Economic Growth In China (1979-2008)

There are two basic methods to analyze the sources of economic growth,one is thesupply analysis approach while the other is the demand analysis approach.The supplyanalysis includes institutional approach and growth accounting approach.The demandanalysis is also called Kaldorian approach.Generally,the supply approach is widely usedby most literature in analyzing the sources of economic growth in China.This thesisfollows the Kaldorian approach which is a demand approach.Actually,the Kaldorian approach can be summarized as Kaldor's Three Laws andThirlwall's Law.The main contents of the Kaldor's Three Laws is that manufacturing isthe engine of the economic growth,and there exists increasing returns to scale inmanufacturing sector.Therefore, the increase of demand for manufactures will push up theoutput of manufacturing sector, at the same time improve the labor productivity ofmanufacturing sector and finally improve the productivity of the whole economy byextracting surplus labors to manufacturing from agricultural sector.Then,with reference toThirlwall's Law,its essence is that the consintent economic development of a country isconstrained by the international balance of payments and export plays an very importantrole in a country's economic growth.This thesis verifies the applicability of Kaldor's ThreeLaws and Thirlwall's Law in China by using China's economic data,that is,the economicgrowth of China has a close relationship with the demand for manufactures and the rapidincrease of export.It shows that the economic growth in China after the reform appearsapparently to be demand-oriented.All in all,whether China can maintain its rapid economic growth will depend onwhether it can maintain the strong domestic demand and the rapid growth of export in thefuture.In view of this ,how to expand domestic demand and maintain the rapid growth ofexport would be a great challenge to China's economy.