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Cumulative causation and inequality among villages in China

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  • John Knight
  • Li Shi

Abstract

Why are villages that are geographically so close together economically so far apart? This question is examined using a survey of 1000 households in seven villages in Hebei province, China. An answer is developed in terms of factor immobility and processes of cumulative causation. Although a good natural resource endowment helps to initiate the process, the main cause of differential village development is non-farm sources of income: migration and village industry. Both are constrained and the easing of the constraints involves path-dependent cumulative processes. For instance, migration requires a village network of information and contacts, and village industrialization depends on the accumulation of local skills through a process of learning-by-doing and on the reinvestment of profits. There is a case for mesoeconomic analysis at the village level in China and in other poor countries.

Suggested Citation

  • John Knight & Li Shi, 1997. "Cumulative causation and inequality among villages in China," Oxford Development Studies, Taylor & Francis Journals, vol. 25(2), pages 149-172.
    • Handle: RePEc:taf:oxdevs:v:25:y:1997:i:2:p:149-172
    DOI: 10.1080/13600819708424127
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    Cited by:

    1. GUSTAFSSON, Bjorn & SAI, Ding, 2009. "Villages where China's ethnic minorities live," China Economic Review, Elsevier, vol. 20(2), pages 193-207, June.
    2. John Knight & Li Shi & Deng Quheng, 2010. "Education and the Poverty Trap in Rural China: Closing the Trap," Oxford Development Studies, Taylor & Francis Journals, vol. 38(1), pages 1-24.
    3. Gustafsson, Bjorn & Shi, Li, 2002. "Income inequality within and across counties in rural China 1988 and 1995," Journal of Development Economics, Elsevier, vol. 69(1), pages 179-204, October.
    4. John Knight & Li Shi & Deng Quheng, 2008. "Education and the Poverty Trap in Rural China," CSAE Working Paper Series 2008-02, Centre for the Study of African Economies, University of Oxford.
    5. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    6. Gustafsson, Björn Anders & Sai, Ding, 2006. "Villages where China's Ethnic Minorities Live," IZA Discussion Papers 2418, Institute of Labor Economics (IZA).
    7. Ming Lu & Jianzhi Zhao, 2009. "The Contribution of Social Networks to Income Inequality in Rural China: A Regression-Based Decomposition and Cross-Regional Comparison," Global COE Hi-Stat Discussion Paper Series gd08-019, Institute of Economic Research, Hitotsubashi University.
    8. Dwayne Benjamin & Loren Brandt & Paul Glewwe & Guo Li, 2002. "Markets, Human Capital and Inequality: Evidence from Rural China," International Economic Association Series, in: Richard B. Freeman (ed.), Inequality Around the World, chapter 5, pages 87-127, Palgrave Macmillan.
    9. Qingjie Xia & Colin Simmons, 2004. "The Determinants of Labour-time Allocation between Farm and Off-farm Work in Rural China: the Case of Liaoning Province," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 2(2), pages 169-184.
    10. James Alm & Yongzheng Liu, 2014. "China's Tax-for-Fee Reform and Village Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 42(1), pages 38-64, March.
    11. Jia, Xiangping & Xiang, Cheng & Huang, Jikun, 2013. "Microfinance, self-employment, and entrepreneurs in less developed areas of rural China," China Economic Review, Elsevier, vol. 27(C), pages 94-103.
    12. Hiroshi Sato, 2010. "Growth of Villages in China, 1990–2002," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 5(1), pages 135-149, March.

    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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