Resource allocation and economic growth in China

This article shows that the allocation of resources among enterprises of different types of ownership is important to economic growth. The data on 30 Chinese provinces indicate that the investment share of state enterprises is negatively related to the growth rate of per‐capita GDP, while the investment share of private enterprises is positively related to the growth rate. Meanwhile, the effect of total investment on the growth rate of per capita‐GDP appears to be insignificant. The share of trade in GDP was positively related to economic growth. Also, the illiteracy rate of employees was negatively related to economic growth.