Estimation of China's Productive Capital Stock from Information Technology Investment: during the Period from 1980 to 2003

Abstract

One of the important issues focusing on information technology on China's economic growth is to capture the flow of the IT capital services from cumulative IT capital stock of past IT investments. IT capital stock in China has not been published at present, and there has been scarce research on estimating this type of stock for its investment data availability. This makes it impossible to carry out further research on IT contribution to China's economic growth. This paper challenges the problem by estimating China's IT productive capital stock during 1980-2003. By estimating China's IT wealth stock in the same period, this paper adds our understanding of cumulative patterns and growth trend of IT productive stock in China. Another contribution of the paper is that we have constructed price indices for investment of IT assets based on the method called 'harmonized deflator', which has not been investigated in China previously. We used the price indices to deflate nominal investment in IT assets to estimate both IT productive stock and IT wealth stock. Our results indicate that IT productive stock has been accumulated much faster than IT wealth stock has done, while both of them have been rising sharply in China since 1980.