The coastal-inland income gap in China from 1991 to 1999: the role of geography and policy
AbstractWe investigate the enlarging coastal-inland income gap in China during the 1990s, using GMM estimation of a Solow growth model. Disaggregating capital investment by source: public, foreign and private: helps to disentangle the effect of policy from those of geography. The impact of public investment on growth is insignificant in our panel data for 29 provinces; that of foreign investment is significant; private investment is most influential. We also use the distance by railway of each provinceâ€™s capital city to its nearest port city as a proxy for transportation costs, and find significant differences across regions. Distance has negative effects on economic development but its marginal impact effects become less as distance increases. The coastal-inland gap will grow in the foreseeable future, if inland areas are not able to benefit from an increase in private investment and infrastructure improvements (to reduce transport costs).
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Bibliographic InfoPaper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 0301.
Date of creation: 01 Jan 2003
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