International integration and the determinants of regional development in China
AbstractConcerns about the duration of China’s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China’s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced a more moderate development. To obtain broad continuos growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (1) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (2) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China’s provinces. Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Extending the model using an unbalanced panel leads to a positive effect of the quality of governance and institutions on development. Copyright UNU-WIDER 2011
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Bibliographic InfoArticle provided by Springer in its journal Economic Change and Restructuring.
Volume (Year): 44 (2011)
Issue (Month): 1 (April)
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Web page: http://www.springerlink.com/link.asp?id=113294
Regional development; FDI; International integration; China; J24; O14; O18; O33; O40; R55;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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