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Clustering, Growth, and Inequality in China

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  • Xu, Cheng-Gang
  • Guo, Di
  • Jiang, Kun
  • Yang, Xiyi

Abstract

This study examines the effects of China’s industrial clusters on its economic growth and urban–rural income inequality. A density-based index (DBI) is developed to capture the unique features of such clusters in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that strong clusters and entrepreneurial clusters substantially enhance economic growth. Moreover, entrepreneurial clusters reduce urban–rural income inequality by increasing the income of rural residents. Identification issues are carefully addressed by deploying an instrumental variable approach.

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  • Xu, Cheng-Gang & Guo, Di & Jiang, Kun & Yang, Xiyi, 2017. "Clustering, Growth, and Inequality in China," CEPR Discussion Papers 12543, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12543
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    More about this item

    Keywords

    China; Clustering; Geography; Growth and inequality; Institutions;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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