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Testing the Neoclassical Theory of Economic Growth: Evidence from Chinese Provinces

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  • Hong Li
  • Zinan Liu

    ()

  • Ivonia Rebelo
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    Abstract

    There has been renewed empirical work recently on testing the neoclassical model of economic growth using data on various groups of countries. But none of the cross-country regressions includes China, the largest developing economy in the world. This study utilises both cross-sectional and panel data on provinces of China over the reform period 1978–1995 to examine the extent to which the growth process in this country can be explained by the augmented Solow-Swan model. We found that in spite of restrictive assumptions used, the model provides a fairly good description of cross-sectional data. The levels and growth rates of GDP per capita are shown to be higher in regional economies with lower population growth, greater openness to foreign countries and more investment in physical and human capital. In addition, regional economies are shown to converge both conditionally and unconditionally over the reform period. However, the quantitative implications of the augmented Solow-Swan model are not borne out in panel data. Copyright Kluwer Academic Publishers 1998

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    Bibliographic Info

    Article provided by Springer in its journal Economics of Planning.

    Volume (Year): 31 (1998)
    Issue (Month): 2 (May)
    Pages: 117-132

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    Handle: RePEc:kap:ecopln:v:31:y:1998:i:2:p:117-132

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    Web page: http://www.springerlink.com/link.asp?id=113294

    Related research

    Keywords: economic growth; neo-classical model; China;

    References

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    1. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
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    Cited by:
    1. Jahangir Aziz & Christoph Duenwald, 2001. "China's Provincial Growth Dynamics," Development and Comp Systems 0012004, EconWPA.
    2. Jahangir Aziz & Christoph Duenwald, 2001. "China's Provincial Growth Dynamics," IMF Working Papers 01/3, International Monetary Fund.
    3. DOBSON, Steve & RAMLOGAN, Carlyn & STROBL, Eric, 2003. "Why do rates of convergence differ ? A meta-regression analysis," CORE Discussion Papers 2003020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Sylvie Demurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy and Regional Development in China," Harvard Institute of Economic Research Working Papers 1950, Harvard - Institute of Economic Research.
    5. Sai Ding & John Knight, 2011. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 141-174, 04.
    6. Gholami, Roghieh & Lee, Sang-Yong Tom & Heshmati, Almas, 2005. "The Causal Relationship between ICT and FDI," Working Paper Series RP2005/26, World Institute for Development Economic Research (UNU-WIDER).
    7. Esfandiar Maasoumi & Le Wang, 2008. "Economic Reform, Growth and Convergence in China," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 128-154, 03.
    8. Ding, Sai & Knight, John, 2009. "Why has China Grown so Fast? The Role of Structural Change," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 7, Verein für Socialpolitik, Research Committee Development Economics.
    9. Johan Lyhagen & Johanna Rickne, 2014. "Income inequality between Chinese regions: newfound harmony or continued discord?," Empirical Economics, Springer, vol. 47(1), pages 93-110, August.
    10. Derek C. Jones & Cheng Li & Ann L. Owen*, 2003. "Growth and Regional Inequality in China During the Reform Era," William Davidson Institute Working Papers Series 2003-561, William Davidson Institute at the University of Michigan.
    11. Marwah, Kanta & Tavakoli, Akbar, 2004. "The effect of foreign capital and imports on economic growth: further evidence from four Asian countries (1970-1998)," Journal of Asian Economics, Elsevier, vol. 15(2), pages 399-413, April.
    12. Bulent Unel & Harm Zebregs, 2006. "The Dynamics of Provincial Growth in China," IMF Working Papers 06/55, International Monetary Fund.
    13. Françoise Lemoine & Grégoire Mayo & Sandra Poncet & Deniz Ünal, 2014. "The Geographic Pattern of China's Growth and Convergence within Industry," Working Papers 2014-04, CEPII research center.

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