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Application of the Input-Output Decomposition Technique to China's Regional Economies


  • Meng, Bo
  • Chao, Qu


Structural decomposition techniques based on input-output table have become a widely used tool for analyzing long term economic growth. However, due to limitations of data, such techniques have never been applied to China's regional economies. Fortunately, in 2003, China's Interregional Input-Output Table for 1987 and Multi-regional Input-Output Table for 1997 were published, making decomposition analysis of China's regional economies possible. This paper first estimates the interregional input-output table in constant price by using an alternative approach: the Grid-Search method, and then applies the standard input-output decomposition technique to China's regional economies for 1987-97. Based on the decomposition results, the contributions to output growth of different factors are summarized at the regional and industrial level. Furthermore, interdependence between China's regional economies is measured and explained by aggregating the decomposition factors into the intraregional multiplier-related effect, the feedback-related effect, and the spillover-related effect. Finally, the performance of China's industrial and regional development policies implemented in the 1990s is briefly discussed based on the analytical results of the paper.

Suggested Citation

  • Meng, Bo & Chao, Qu, 2007. "Application of the Input-Output Decomposition Technique to China's Regional Economies," IDE Discussion Papers 102, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper102

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    References listed on IDEAS

    1. Erik Dietzenbacher & Bart Los, 1998. "Structural Decomposition Techniques: Sense and Sensitivity," Economic Systems Research, Taylor & Francis Journals, vol. 10(4), pages 307-324.
    2. Brun, J. F. & Combes, J. L. & Renard, M. F., 2002. "Are there spillover effects between coastal and noncoastal regions in China?," China Economic Review, Elsevier, vol. 13(2-3), pages 161-169.
    3. Q. Zhang & B. Felmingham, 2002. "The Role of FDI, Exports and Spillover Effects in the Regional Development of China," Journal of Development Studies, Taylor & Francis Journals, vol. 38(4), pages 157-178.
    4. Wolff, Edward N., 1994. "Productivity measurement within an input-output framework," Regional Science and Urban Economics, Elsevier, vol. 24(1), pages 75-92, February.
    5. de Boer, P.M.C., 2006. "Structural decomposition analysis and index number theory: an empirical application of the Montgomery decomposition," Econometric Institute Research Papers EI 2006-39, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Dietzenbacher, Erik & Hoen, Alex R, 1998. "Deflation of Input-Output Tables from the User's Point of View: A Heuristic Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 111-122, March.
    7. Round, Jeffrey I, 1985. "Decomposing Multipliers for Economic Systems Involving Regional and World Trade," Economic Journal, Royal Economic Society, vol. 95(378), pages 383-399, June.
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    Cited by:

    1. Yang, Ling & Lahr, Michael L., 2008. "Labor Productivity Differences in China 1987-1997: An Interregional Decomposition Analysis," The Review of Regional Studies, Southern Regional Science Association, vol. 38(3), pages 319-341.
    2. Eric Girardin & Konstantin A. Kholodilin, 2011. "How helpful are spatial effects in forecasting the growth of Chinese provinces?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 30(7), pages 622-643, November.
    3. Marco Antonio Márquez Mendoza, 2012. "Efectos de derrame y de retroalimentación industrial en América del Norte: un enfoque nacional e internacional," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 1-34, May.
    4. Nobuhiro Okamoto & Satoshi Inomata, 2011. "To What Extent Will the Shock Be Alleviated? The Evaluation of China’s Counter-crisis Fiscal Expansion," Chapters,in: Asia Beyond the Global Economic Crisis, chapter 6 Edward Elgar Publishing.
    5. Veronika Kulmer & Michael Kernitzkyi & Judith Köberl & Andreas Niederl, 2015. "Global Value Chains: Implications for the Austrian economy," FIW Research Reports series VI-003, FIW.
    6. repec:wyi:journl:002154 is not listed on IDEAS
    7. Peltonen, Tuomas & Pula, Gabor, 2009. "Has emerging Asia decoupled? An analysis of production and trade linkages using the Asian international input-output table," Working Paper Series 993, European Central Bank.
    8. Ouyang, Puman & Fu, Shihe, 2012. "Economic growth, local industrial development and inter-regional spillovers from foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 445-460.
    9. Huanhuan ZHENG & Qingyang GU, "undated". "Measuring Inter-Regional Trade Barriers," EcoMod2008 23800159, EcoMod.

    More about this item


    Input-Output; Decomposition; Economic growth; China’s regional economies; China; Local economy; Imput-output tables; 産業連関表; 分解; 経済成長; 中国地域経済; 中国; 地域経済;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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