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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.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Oxford Development Studies.

Volume (Year): 25 (1997)
Issue (Month): 2 ()
Pages: 149-172

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Handle: RePEc:taf:oxdevs:v:25:y:1997:i:2:p:149-172

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Cited by:
  1. 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.
  2. 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.
  3. John Knight & Li Shi & Deng Quheng, 2008. "Education and the Poverty Trap in Rural China," Economics Series Working Papers WPS/2008-02, University of Oxford, Department of Economics.
  4. Gustafsson, Björn Anders & Sai, Ding, 2006. "Villages where China's Ethnic Minorities Live," IZA Discussion Papers 2418, Institute for the Study of Labor (IZA).
  5. 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.
  6. 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.
  7. Hiroshi Sato, 2009. "Growth of Villages in China, 1990-2002," Global COE Hi-Stat Discussion Paper Series gd08-023, Institute of Economic Research, Hitotsubashi University.
  8. 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.
  9. Dwayne Benjamin & Loren Brandt & Paul Glewwe & Li Guo, 2000. "Markets, Human Capital, and Inequality: Evidence from Rural China," Working Papers benjamin-00-01, University of Toronto, Department of Economics.
  10. 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.

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