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Abstract The Egyptian economic growth record during 1971-2011 has been characterized by being moderate and volatile compared to that of China during the same time period. In an attempt to reveal the reasons beyond such unsatisfying Egyptian economic growth record, a detailed investigation of the sources of growth in real GDP during 1971-2011 has been undertaken for China and Egypt at the macro level, so that to compare the sources of economic growth in both countries, with an emphasis on the role played by total factor productivity growth (TFPG). Such investigation of the sources of growth has been undertaken using the ‘two-stage TFPG analysis’, which starts by decomposing the sources of growth in real GDP using the growth accounting approach into the contributions of factor inputs (capital and labor) and those of TFPG. Such decomposition of the sources of growth in real GDP is then complemented with an analysis of TFPG determinants adopting the regression analysis, with the aim of identifying the major sources of TFPG improvements in both countries as well as the main challenges facing it. In this sense, the results of growth accounting exercise showed that TFPG was the key to strong and sustainable real GDP growth in China in the post reform era (1979-2011) since physical capital accumulation has been coupled with strong TFPG, whereas the moderate and volatile Egyptian growth record during 1971-2011 was mainly due to the dependence on physical capital accumulation as the major source of growth in real GDP with a modest role for TFPG in most sub-periods. Meanwhile, the analysis of TFPG determinants revealed that TFPG has been restricted in Egypt by the limited role played by FDI and trade flows in addition to the negative impacts of macroeconomic instability. On the other hand, the openness of the Chinese economy to FDI and trade flows was among the major sources of TFPG in the post reform era. Furthermore, the comparative evaluation of the growth experiences of both countries showed that Egypt can benefit from the Chinese experience in terms of the approach and content of the reform process and its impact on TFPG. However, the differences in the social and political context of both countries should be taken into consideration while evaluating the applicability of the Chinese model to the Egyptian case. |