Economic Growth and Development

reflected in the consistently high contributions of labour. TFP growth has made
a negligible contribution in all developing regions, even turning negative in
both Africa and the Middle East. The contribution of capital being higher in
poorer countries confirms another important idea, that of diminishing returns
to investment (see Chapter 5).
Both China and India had very low per capita incomes in 1980; India’s was
roughly equal to the World Bank average for all low-income countries, and
China’s about two-thirds of that level. By 2004 GDP per capita had roughly
doubled in India and risen seven-fold in China. Table 2.7 shows that average
GDP growth in China and India averaged 9.3 and 5.4 per cent respectively

58 Sources of Growth in the Modern World Economy since 1950

Table 2.6 Sources of growth in developing countries, 1960–94

(average annual percentage changes)

Capital (%) Labour (%) TFP (%) Output

East Asia 3.4 (50%) 2.3 (34%) 1.1 (16%) 6.8

South Asia 1.8 (43%) 1.6 (38%) 0.8 (19%) 4.2

Latin America 1.8 (43%) 2.2 (52%) 0.2 (5%) 4.2

Africa 1.7 (59%) 1.8 (62%) –0.6 (–21%) 2.9

Middle East 2.5 (56%) 2.3 (51%) –0.3 (–7%) 4.5

Source: Data compiled from Crafts (1999:26).

Table 2.7 Sources of growth: China, India, and East Asia, 1978–2004

(percentage average annual GDP increase)

Contribution to output per

worker of

Period/ Output Employment Output per Physical Education TFP

country worker capital

1978–2004 9.3 2.0 7.3 3.2 0.3 3.6

China

1978–2004 5.4 2.0 3.3 1.3 4.0 1.6

India

1978–1993 8.9 2.5 6.4 2.4 0.4 3.5

China

1978–1993 4.5 2.1 2.4 0.9 0.3 1.1

India

1993–2004 9.7 1.2 8.5 4.2 0.3 3.9

China

1993–2004 6.5 1.9 4.6 1.8 0.4 2.3

India

Source: Data compiled from Bosworth and Collins (2008:49).