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Regional capital flows and economic regimes: Evidence from China

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  • Deng, Liuchun
  • Wang, Boqun

Abstract

Using provincial data from China, this paper examines the pattern of capital flows in relation to the transition of economic regimes. We show that fast-growing provinces experienced less capital inflows before the large-scale market reform, contrary to the prediction of the neoclassical growth theory. As China transitioned from the central-planning economy to the market economy, the negative correlation between productivity growth and capital inflows became much less pronounced. From a regional perspective, this finding suggests domestic institutional factors play an important role in shaping the pattern of capital flows.

Suggested Citation

  • Deng, Liuchun & Wang, Boqun, 2016. "Regional capital flows and economic regimes: Evidence from China," Economics Letters, Elsevier, vol. 141(C), pages 80-83.
    • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:80-83
    DOI: 10.1016/j.econlet.2015.10.008
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    Cited by:

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    More about this item

    Keywords

    Regime change; Allocation puzzle; Economic transition; Productivity growth; Regional capital flow;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General

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