China-United States Productivity Catch-Up: Escaping the Middle-Income Trap?

Paul Duo Deng, Gary H. Jefferson

Research output: Contribution to conferencePaperResearchpeer-review


China’s gap in industrial labor productivity with the United States has been steadily shrinking over recent decades. In this paper we examine the main sources of gap reduction and the potential for further catch-up. Using Chinese above-scale firm-level data during 1998-2007 period and BEA industry -level data in the US, we first document the respective rates of growth of labor productivity, gap reduction, and contributions to overall catch-up of China’s manufacturing sector during 1998-2007. We then aggregate the firm-level data to the 3-digit industry level to estimate a productivity gap reduction function and find that the key drivers for the productivity convergence are the initial technology gap, increased R&D spending, firm’s ownership restructuring, and industry level entry-exit ratio, a measure of competitive dynamism. A key finding is that the catch-up dynamic entails the break out of a small number of firms within each industry rather than catch-up of lagging firms. We then use these finding to investigate on-going patterns of catch-up during 2007 to 2011
Original languageEnglish
Publication date2015
Number of pages54
Publication statusPublished - 2015
EventThe Annual Meeting of The Association for Comparative Economic Studies. ACES 2015 - Boston Marriott Copley, Boston, United States
Duration: 3 Jan 20155 Jan 2015


ConferenceThe Annual Meeting of The Association for Comparative Economic Studies. ACES 2015
LocationBoston Marriott Copley
Country/TerritoryUnited States
Internet address

Cite this