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Misallocation and manufacturing TFP in China and India

Hsieh, Chang-tai; Klenow, Peter J. - 2007

Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing … establishments to quantify the extent of this misallocation in China and India compared to the U.S. in recent years. Compared to the … in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent …