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The Effects of Intraregional Disparities on Regional Development in China: Inequality Decomposition and Panel-Data Analysis

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Reuter
Ulrich
Abstract

This paper analyzes the development and effects of intra-provincial regional disparities in China between 1989 and 2001. A decomposition analysis shows that intraprovincial disparities contribute significantly to total regional inequality. In the second part of the paper, the impact of the observed intraprovincial disparities on regional economic development is addressed. Using provincial panel data on industrial growth, capital and employment, the impact of inequality on industrial growth is estimated as affecting technical efficiency and level of technology. The results show a significant positive effect of intra-provincial disparities on provincial industrial growth, with causality from inequality to growth. Moreover, it appears that the inequality-growth relationship is not a linear one, but rather that the impact of extreme changes in inequality is stronger and more significant than a moderate increase in inequality. These outcomes are robust to alternative model specifications and control variabl

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Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 716.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:feam04:716

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Keywords: Inequality; Decomposition; Growth; Panel Data; China;

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Find related papers by JEL classification:
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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