IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

New evidence about regional income divergence in China

  • LAU, Chi Keung Marco

There are many empirical studies trying to test if there is income convergence across the provinces of China. In this paper, we bring new information to the current literature by applying non-linear panel unit root test of Exponential Smooth Auto-Regressive Augmented Dickey-Fuller (ESTAR-ADF) unit root test developed by Cerrato et al. (2008) to the time series data for the period 1952-2003. The number of converging provinces decreases in the post-reform period when using panel ESTAR-ADF test. Furthermore, our results find evidence of increasing regional disparity that has been prevailing in China since the open door economic reforms of the late 1970s, which confirms the view of Pedroni and Yao (2006) that interprovincial inequalities have been widening since 1978. In addition, we also examine the determinants of conditional convergence in China. The results indicate that low inflation, transport and telecommunication infrastructure, and trade openness could stimulate economic growth in China. Human capital also play a significant role in growth, and it exhibits non-linearity between human capital and growth in the sense that at low levels of human capital the effect on growth is negative and became positive at middle levels.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S1043-951X(10)00004-0
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 21 (2010)
Issue (Month): 2 (June)
Pages: 293-309

as
in new window

Handle: RePEc:eee:chieco:v:21:y:2010:i:2:p:293-309
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Mario Cerrato & Christian de Peretti & Nick Sarantis, 2008. "A Nonlinear Panel Unit Root Test under Cross Section Dependence," Working Papers 2008_08, Business School - Economics, University of Glasgow.
  2. Kalaitzidakis, Pantelis & Mamuneas, Theofanis P. & Savvides, Andreas & Stengos, Thanasis, 2001. "Measures of Human Capital and Nonlinearities in Economic Growth," Journal of Economic Growth, Springer, vol. 6(3), pages 229-54, September.
  3. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
  4. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
  5. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
  6. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  7. Stanley Fischer, 1983. "Inflation and Growth," NBER Working Papers 1235, National Bureau of Economic Research, Inc.
  8. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  9. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
  10. Yin-Wong Cheung & Antonio I. Garcia Pascual, 2000. "Testing for Output Convergence: A Re-Examination," CESifo Working Paper Series 319, CESifo Group Munich.
  11. Chowdhury, Ibrahim & Sarno, Lucio & Taylor, Mark P, 2002. "Non-Linear Dynamics in Deviations from the Law of One Price: A Broad-Based Empirical Study," CEPR Discussion Papers 3377, C.E.P.R. Discussion Papers.
  12. Lynn E. Browne, 1989. "Shifting regional fortunes: the wheel turns," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 27-40.
  13. Peter Pedroni & James Yudong Yao, 2005. "Regional Income Divergence in China," Department of Economics Working Papers 2005-03, Department of Economics, Williams College.
  14. Jörg Breitung & Samarjit Das, 2005. "Panel unit root tests under cross-sectional dependence," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 59(4), pages 414-433.
  15. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
  16. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  17. Kapetanios, George & Shin, Yongcheol & Snell, Andy, 2003. "Testing for a unit root in the nonlinear STAR framework," Journal of Econometrics, Elsevier, vol. 112(2), pages 359-379, February.
  18. Peel, David & Sarno, Lucio & Taylor, Mark P, 2001. "Nonlinear Mean-Reversion in Real Exchange Rates: Towards a Solution to the Purchasing Power Parity Puzzles," CEPR Discussion Papers 2658, C.E.P.R. Discussion Papers.
  19. Matthew P. Drennan & José Lobo & Deborah Strumsky, 2004. "Unit root tests of sigma income convergence across us metropolitan areas," Journal of Economic Geography, Oxford University Press, vol. 4(5), pages 583-595, November.
  20. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
  21. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
  22. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  23. Fan, C. Simon, 2004. "Quality, trade, and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 271-291, October.
  24. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
  25. Glaeser, E.L. & Scheinkman, J.A., 1993. "Economic Growth in a Cross-Section of Cities," Harvard Institute of Economic Research Working Papers 1645, Harvard - Institute of Economic Research.
  26. Michael, Panos & Nobay, A Robert & Peel, David A, 1997. "Transactions Costs and Nonlinear Adjustment in Real Exchange Rates: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 862-79, August.
  27. Charles I. Jones, . "Convergence Revisited," Working Papers 96006, Stanford University, Department of Economics.
  28. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence," Papers 645, Yale - Economic Growth Center.
  29. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  30. Gerald A. Carlino, 1992. "Are regional per capita earnings diverging?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 3-12.
  31. Drennan, Matthew P. & Lobo, Jose, 1999. "A Simple Test for Convergence of Metropolitan Income in the United States," Journal of Urban Economics, Elsevier, vol. 46(3), pages 350-359, November.
  32. Chi Keung Marco Lau, 2009. "A more powerful panel unit root test with an application to PPP," Applied Economics Letters, Taylor & Francis Journals, vol. 16(1), pages 75-80.
  33. Ram, Rati, 1990. "Imports and Economic Growth: A Cross-Country Study," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 43(1), pages 45-66.
  34. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
  35. Paul Evans, 1998. "Income Dynamics in Regions and Countries," Working Papers 98-09, Ohio State University, Department of Economics.
  36. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  37. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  38. Lau, Lawrence J. & Jamison, Dean T. & Liu, Shu-Cheng & Rivkin, Steven, 1993. "Education and economic growth Some cross-sectional evidence from Brazil," Journal of Development Economics, Elsevier, vol. 41(1), pages 45-70, June.
  39. Lei Ding & Kingsley Haynes & Yanchun Liu, 2008. "Telecommunications infrastructure and regional income convergence in China: panel data approaches," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(4), pages 843-861, December.
  40. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:21:y:2010:i:2:p:293-309. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.