Structural Transformation, TFP and High-Quality Development

Liu Zhibiao (刘志彪)* and Ling Yonghui (凌永辉)

Yangtze River Industrial Economic Research Institute, Nanjing University, Nanjing, China

Abstract: In this paper, we performed an empirical study on the TFP effect of structuraltransformation based on panel data of economic growth in 169 countries across the world.Our findings are threefold: First, structural transformation has an inverted U-shaped effecton TFP. When the degree of structural transformation is on the left side of the inflectionpoint, structural transformation is conducive to softening industrial structure and inducingTFP; when the degree of structural transformation is on the right side of the inflectionpoint, structural transformation will induce industrial hollowing out and inhibit TFP.Second, since the reform and opening up program was launched in 1978, China’s structuraltransformation has evolved from the stage of adaptation to the stage of strategic adjustmentwith an increasingly evident trend towards a service-based economy, but structuraltransformation remains on the left side of the inflection point of the inverted U-shapedcurve, i.e. the TFP effect of structural transformation is positive. Third, TFP improvementlies at the heart of high-quality development. In pursuing high-quality development, Chinashould lower growth rate expectations, attach greater importance to supply-side structuralreforms, and accelerate structural transformation to promote TFP improvement.

Keywords: Economic growth, structural transformation, TFP, high-quality development

JEL Classification Codes: O14, O25, O47

DOI: 10.19602/j.chinaeconomist.2022.01.06