Capital deepening: the only way towards higher productivity and income

YIN Xingming ( 殷醒民 )
Professor with China Center for Economic Studies, Fudan University

Abstract:
Technological progress is the main driver of labor productivity in manufacturing industries. But it is capital
accumulation that makes such progress possible. In the early 21st century, China’s manufacturing entered a process
of capital deepening, in which labor productivity improvement is based on the increase of per capita assets. Capital
accumulation in technical industries has created higher labor productivity and enabled phenomenal growth of new
technology industries, contributing to the rapid and all-round growth of manufacturing industries as a whole. This is
the real premise of China’s sustained economic growth over the past ten years.
Key words:
Capital accumulation; Manufacturing structure; Economic growth; Sector advantage

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