TITLE: Estimating CES Aggregate Production Functions of China and India
KEYWORDS: CES production function, Physical capital, Human capital, Economic development
ABSTRACT: We have observed remarkably different patterns in the development processes of China and India. For example, data from our sample show that, comparing with India, China has considerably higher rates of physical capital formation as well as much higher ratios of measured physical to human capital. Motivated by these empirical observations, we estimate the key technological parameters of in a CES production function with physical and human capital for China using panel data at the provincial level and for India using panel data at the state level, respectively. Our estimation results on the factor income shares and the elasticity of substitution between the input factors yield implications that match broadly with the above stylized growth patterns regarding China and India.
