Measurement Of Chinese Provincial Capital Services: 1993-2013

Capital measurement encompasses different measures of capital stocks alongside with the relevant measures of economic flows, and different measurement concepts including net capital stock and capital service are used to reflect the dual nature of capital which is both storage of wealth and a source of capital services in production. Net capital stock is not the right index to reflect capital input for two reasons. On the one hand, capital input is a flow concept like other variables in the production function, and on the other hand, it can’t reflect capital’s productive efficiency. Jorgenson (1963) pointed out that capital service is the best index to measure capital input, and his viewpoint is accepted by economists and international organizations gradually. SNA (2008) introduced capital service for the first time and offered a possible supplemental table. Two manuals Measuring Capital and Measuring Productivity produced by OECD provide detailed measurement for users. Statistical departments in some countries like the USA, Canada and Australia have published capital service data annually.In the recent years, some scholars have been trying to do research on capital service measurement, but their research is mainly based on the whole country or industry level. Provincial capital service in our country is rarely measured. As is known to all, GDP and investment in our country increased rapidly since the reform and opening, but not all provinces in our country developed at the same pace. Disparities in capital input and GDP exist broadly among different provinces. As the result, in order to achieve coordinated development of regions, it helps to measure provincial capital services accurately and analyze the role of capital input in regional economic development.This paper basically includes two parts. Firstly, based on the review of related domestic and foreign literatures, it elaborates on the theory of capital service, defines the scope of measurement and classifications, and builds the framework of capital service measurement. In the second part, it estimates provincial productive capital stocks and capital service indices of 1993-2013 in our country with the exception of Tibet, and analyzes the disparities in capital input among different economic zones based on the estimations.This paper is divided into five chapters. The first chapter introduces the study background and significance, reviews the related literatures and offers its own research approach. The second chapter focuses on the elaboration of the theory of capital service. It defines the scope of measurement, differentiates the related concepts like productive capital stock, wealth capital stock and capital service, elaborates on the basic economic equation behind the measurement and analyzes basic terms including the perpetual inventory method, age-efficiency profiles and age-price profiles. The third chapter involves choosing the appropriate indices and dealing with the missing data. The fourth chapter shows the measuring results and makes some analysis on the differences of regional capital services based on the results. The fifth chapter gives out conclusions and further research directions of this paper.It turns out that productive capital stocks in the eastern area is significantly larger than that of other parts of China, but the disparities are becoming smaller due to high growth rate of capital services in central, western and northeastern areas. However, higher growth rate of capital services fails to bring higher GDP growth rate in those regions. From 1993 to 2013, eastern area enjoys higher GDP growth rate than capital service growth rate, while that is not the case for other regions.The creative points of this paper lie in three parts. (1) This paper focuses on the measurement of provincial capital service measurement and the analysis of disparities of capital service among four economic zones in our country. The resulting data can be of use for those who study provincial economic growth or total factor productivity. (2) This paper defines the scope of capital measurement. The past research defaults to fixed assets without consideration of other types of assets, but this paper elaborates on other types of assets’possibility to bring out capital service, especially on inventory, and figures out the exist problems of measurement. (3) This paper differentiates the age-efficiency profile for a single asset and the age-efficiency profile for a cohort of asset, which makes the related hypothesis more reliable. Definitely due to the restrictions of the obtainable basic data and the author’s academic competence, there are a lot of deficiencies in this paper. For example, this paper estimates capital services only for fixed assets and the times series is much too short. And overcoming those deficiencies needs further research.