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Are there industrial and agricultural convergence clubs in China?

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  • Pääkkönen, Jenni
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    This paper discusses growth differentials of Chinese provinces geared to agricultural activities and those focusing on industrial production over three decades of economic reform. Following trade theory and endogenous growth theory, we suggest that the fundamental differences between regions arise from their resource allocations at the start of reforms. Thus, capital-abundant regions have tended to specialize in industrial production, while the labor-abundant regions have concentrated on labor-intensive pro- duction (agriculture). Many of China.s agricultural provinces suffer from oversupplies of labor, which has led large numbers of people to migrate within the country to work in non-farming sectors of economy. We show that provinces with high shares of industrial production (the industrial club) have converged, and that agricultural provinces shifting to industrial production have been catching up to initially industrialized provinces. Provinces that have stayed with an agricultural strategy (the agricultural club) show no evidence of convergence and appear to have been left behind in terms of economic development. JEL Classi.cation: O17, O40, O57. Keywords: Growth, Agriculture, Convergence.

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    File URL: https://helda.helsinki.fi/bof/bitstream/123456789/8274/1/164169.pdf
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    Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 15/2009.

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    Date of creation: 05 Oct 2009
    Publication status: Published in Published in Journal of Chinese Economic and Business Studies, Volume 10, Issue 1, February 2012, Pages 1-13
    Handle: RePEc:bof:bofitp:2009_015
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    Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland

    Phone: + 358 9 183 2268
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    Web page: http://www.bofit.fi/en/
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    1. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-856, July.
    2. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
    3. Chen, Baizhu & Feng, Yi, 2000. "Determinants of economic growth in China: Private enterprise, education, and openness," China Economic Review, Elsevier, vol. 11(1), pages 1-15.
    4. Chen, Po-Chi & Yu, Ming-Miin & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2008. "Total factor productivity growth in China's agricultural sector," China Economic Review, Elsevier, vol. 19(4), pages 580-593, December.
    5. Aram, John D. & Xiaoli, Wang, 1991. "Lessons from Chinese state economic reform," China Economic Review, Elsevier, vol. 2(1), pages 29-46.
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