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Discussion Paper Details

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Title: Who Shrunk China? Puzzles in the Measurement of Real GDP

Author(s): Robert Feenstra, Hong Ma, J Peter Neary and DS Prasada Rao

Publication Date: October 2011

Keyword(s): EKS, Geary-Khamis and GAIA Indexes, Gerschenkron Effect, International comparisons of real income and GDP, Measurement economics and substitution bias

Programme Area(s): International Trade and Regional Economics

Abstract: The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.

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Bibliographic Reference

Feenstra, R, Ma, H, Neary, J and Rao, D. 2011. 'Who Shrunk China? Puzzles in the Measurement of Real GDP'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8592