Growth strategy and TFP growth: comparing China and four Asian tigers

This paper compares the total factor productivity (TFP) growth performance of the Chinese mainland and the Four Asian Tigers during their high-growth period and examines the effect of growth strategies pursued by these economies on TFP growth using a state-space model. Our research results show that TFP growth is quite limited in these economies, which is mainly attributed to their growth strategy. No significant productivity gains arise from the rapid growth of investments, trade openness, and an undervalued currency in these economies. The TFP growth is even found negatively related to trade openness for South Korea, the exchange rate undervaluation for Chinese Taiwan and Singapore, and the falling relative price of capital for the Chinese mainland, Singapore and South Korea. Government interventions encourage long-term TFP growth for the Chinese mainland and Taiwan, but hinder it in other economies. Higher inflation reduces TFP growth in Chinese Taiwan and Singapore.