Abstract
China’s civil aviation industry experienced an average annual growth rate of over 16% for traffic turnover during 1955-2011. It is important to identify the role of capital and labor inputs as well as total factor productivity (TFP) in China’s civil aviation industry during this period of time. First, the inputs of capital stock and labor as well as the output of traffic turnover in China’s air transport industry are measured. Next, the constrained E-G two-stage estimation of the CD production function is used to calculate the capital and labor elasticities and TFP, which provides the necessary basis for the estimation of the growth sources in China’s air transport industry from 1955 to 2011. The results show that the growth of China’s civil aviation industry has depended on the capital factor input and that TFP has played an increasingly important role. Furthermore, the results also indicate that private sources have been crucial for improving the TFP after the 2002 reform.
Highlights
In recent years, the air transport industry in China has received significant attention internationally due to its rapid growth rate over the past thirty years, even after the onset of the 2008 financial crisis
The dominant view was that China’s rapid economic growth was mainly supported by the inputs of capital, labor, energy and raw materials, with some scholars concluding that the total factor productivity (TFP) contributed little [2] [3], while others reported that the contribution of TFP to China’s economic growth increased gradually [4] [5]
Chow [6] noted that the accumulation of capital was the main source of economic growth in China, and Chow and Li [7] estimated that the contributions of capital, labor and TFP were 66.34%, 5.7% and 27.59%, respectively, during 1978-1998
Summary
The air transport industry in China has received significant attention internationally due to its rapid growth rate over the past thirty years, even after the onset of the 2008 financial crisis. Chow [6] noted that the accumulation of capital was the main source of economic growth in China, and Chow and Li [7] estimated that the contributions of capital, labor and TFP were 66.34%, 5.7% and 27.59%, respectively, during 1978-1998. After the open-door policy was adopted in 1978, the air transport industry in China experienced major reforms in 1980, 1987 and 20021. Did these institutional transitions change the pattern of growth sources in this industry? This paper identifies the main sources that supported the rapid growth of the air transport industry.
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