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Infrastructure, Knowledge Creation and Spillovers and Economic Growth in China

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  • Sangaralingam Ramesh

    ()
    (Department of Economics, SOAS, University of London, UK)

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    Abstract

    The economic prosperity associated with the Coastal regions of China has not 'trickled' down to the Western and Central regions sufficiently enough to eliminate the disparities in income between the regions. Indeed, the disparities between China's Coastal regions and its other regions continue to deepen to the present day. In the Mao period the Central planners held the mistaken belief that investment in the railways and development of heavy industry in the interior parts of China would bring prosperity. In the reform period and beyond, the focus of economic development in China has been to take advantage of China’s low labour costs. In the earlier part of the reform era the focus of economic reforms centred on the development of Special Economic Zones (SEZ's) .In the second phase of reform policies were centred on the High Technology Development Zones [NHTIDZ's].A characteristic feature of both SEZ’s and NHTIDZ's is that they represent a concentration of infrastructure within a predefined spatial area. The framework of analysis in this paper is the New Economic Geography [NEG]. The NEG addresses the formation of agglomeration economies accruing to physical linkages in one location. However, the NEG does not address the issue of how agglomeration economies form due to knowledge creation linkages which are location independent. The main facet of this approach is that it will allow for a qualitative analysis of the spatial aspects of the infrastructural and knowledge creation factors affecting China's economic growth. Previous approaches which have been used to study infrastructure and economic growth in China have been based on Econometric techniques. These approaches use measures such as length of railway, length of roads and telephone density, while in reality the concentration of infrastructure in the SEZ’s and NHTIDZ's as significantly contributed to China's post 1978 economic growth.

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    File URL: http://www.soas.ac.uk/economics/research/workingpapers/file50746.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, SOAS, University of London, UK in its series Working Papers with number 162.

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    Length: 26 pages
    Date of creation: Dec 2008
    Date of revision:
    Handle: RePEc:soa:wpaper:162

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    Keywords: Income disparity; Infrastructure; Knowledge Creation; New Economic Geography; China;

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    1. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
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