On explaining China's rural sectors' productivity growth

While explaining China's rural sectors' productivity growth in the post-reform period, several studies have identified technological progress and improvement in technical efficiency as the two major sources of productivity growth. Though institutional reform measures have been vital to productivity growth, the question addressed in this paper is as to which factor has provided the link between productivity growth and reform. With a two-sector model, this paper identifies that removing institutional restrictions on intersectoral labour mobility has been instrumental in accelerating economic growth at the overall rural economy level. Empirical results also show that an anti-market policy change had produced a negative effect on productivity growth between 1989 and 1991 at the rural economy level. (C) 2002 Elsevier Science B.V. All rights reserved.