[OPE] More on X-Efficiency: and neoclassical growth ideas

 I have come across something in accounts of Chinese economic growth that seems related to the x-efficiency idea in neo-classical economics that Mike was discussing.
" Much previous research on economic development has suggested
a significant role for capital investment in economic growth, and a
sizable portion of China's recent growth is in fact attributable to
capital investment that has made the country more productive. In
other words, new machinery, better technology, and more investment
in infrastructure have helped to raise output. Yet, although the
capital stock grew by nearly 7 percent a year over 1979-94, the
capital-output ratio has hardly budged. In other words, despite a
huge expenditure of capital, production of goods and services per
unit of capital remained about the same. This pronounced lack of
capital deepening suggests a constrained role for capital. The labor
input-an abundant resource in China-also saw its relative weight
in the economy decline. Thus, while capital formation alone
accounted for over 65 percent of pre-1978 growth, with labor
adding another 17 percent, together they accounted for only 58 per-
cent of the post-1978 boom, a slide of almost 25 percentage points.
Productivity increases made up the rest." ( International Monetary
Fund Report, Why is China Growing So Fast ).

My question is: how on earth do they think they can come up with
Figures?
First there is the general issue of inter temporal comparisons
Of output, but leaving that aside,
how do they think they can attribute parts of the growth in output to labour and capital?
What assumptions do they make?

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Received on Wed Aug 18 04:14:48 2010