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Provincial Income Convergence in China, 1953-1997: a Panel Data Approach

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  • Yudon, Y.
  • Weeks, M.

Abstract

China's accelerated growth rate during the reform period 1978-97 has reinforced concerns about how to cope with continued expansion while also maintaining balanced regional growth. We examine the tendency to, and the speed of, provincial income convergence during the two periods: pre-reform (1953-1977) and reform (1978-1997). The Solow growth model provides the main theoretical framework. The empirical method accounts for heteogeneity in both initial technology and the rate of technological progress. Estimation problems are addressed by using the System GMM Estimator and a coefficient bound provided by the OLS and within group estimator. Although we find evidence of conditional convergence for both the periods, relative to the estimated convergence speed for other regions and countries, China's provincial convergence speeds are surprisingly low: 0.414% for the pre-reform period and 2.23% for the reform period. This means that, despite China's remarkable economic growth, the provincial income converg ence process has been disappointing.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0010.

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Date of creation: Nov 2000
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Handle: RePEc:cam:camdae:0010

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Related research

Keywords: Provincial convergence; China; panel data; GMM estimators;

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Citations

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Cited by:
  1. Gries, Thomas & Redlin, Margarete, 2008. "International Integration and Regional Development in China," Working Paper Series RP2008/66, World Institute for Development Economic Research (UNU-WIDER).
  2. Reuter & Ulrich, 2004. "The Effects of Intraregional Disparities on Regional Development in China: Inequality Decomposition and Panel-Data Analysis," Econometric Society 2004 Far Eastern Meetings 716, Econometric Society.
  3. Holger Breinlich & Gianmarco I.P. Ottaviano & Jonathan R.W. Temple, 2013. "Regional growth and regional decline," Economics Discussion Papers 729, University of Essex, Department of Economics.
  4. Qichun He, 2011. "Does FDI Promote Human Capital Accumulation? The Role of Gradual Financial Liberalization," CEMA Working Papers 455, China Economics and Management Academy, Central University of Finance and Economics.
  5. He, Qichun, 2011. "Home-bias Politics, Financial Deregulation and Economic Growth: A Causal Relationship," MPRA Paper 34482, University Library of Munich, Germany.
  6. Jongchul Lee, 2006. "Sources Of Divergence Between Coastal And Interior Regions In China," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 31(2), pages 123-138, December.
  7. He, Qichun, 2011. "Dances with Chinese data: are the reform period Chinese provincial panel data reliable?," MPRA Paper 35418, University Library of Munich, Germany.
  8. Stefania BUSSOLETTI & Roberto ESPOSTI, 2004. "Regional Convergence, Structural Funds and the Role of Agricolture in the EU. A Panel-Data Approach," Working Papers 220, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  9. Aroca, Patricio & Guo, Dong & Hewings, Geoffrey J.D., 2006. "Spatial Convergence in China: 1952-99," Working Paper Series RP2006/89, World Institute for Development Economic Research (UNU-WIDER).
  10. T. Gries & M. Redlin, 2011. "International integration and the determinants of regional development in China," Economic Change and Restructuring, Springer, vol. 44(1), pages 149-177, April.
  11. Westerlund, Joakim & Edgerton, David L. & Opper, Sonja, 2010. "Why is Chinese provincial output diverging?," Journal of Asian Economics, Elsevier, vol. 21(4), pages 333-344, August.
  12. Joao Tovar Jalles, 2011. "The Impact Of Democracy And Corruption On The Debt-Growth Relationship In Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(4), pages 41-72, December.
  13. Daoqin TONG & Sandy DALL’ERBA, 2008. "Spatial Disparities In The Chinese Ict Sector: A Regional Analysis," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 28, pages 111-129.

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