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Economic Reform, Growth and Convergence in China

  • Maasoumi, Esfandiar

    ()

    (SMU)

  • Wang, Le

    (SMU)

In this paper, we propose a new concept of convergence which is based on the metric entropy measure recently proposed by Granger et al. (2004) to investigate economic convergence in China. This entropy measure compares whole distributions of growth rates across individual provinces. Separately, based on this same entropy measure, we also implement cluster analysis to identify any convergence clubs. Our four main conclusions are: (1) while we certainly reject the null hypothesis that there exists a nation-wide convergence, we do ?nd that there exist convergence clubs for both the pre- and post-reform periods, (2) we ?nd a number of very small convergence clubs. In particular, there are seven and ?ve convergence clubs for the pre- and post-reform periods, respectively. (3) in comparing the number and size of convergence clubs for both the pre- and post-reform periods, it could be argued that the extent of convergence is more prevalent during the post-reform period than during the pre-reform period, (4) convergence groups cannot be characterized by such unique features as region or the extent of policy preference level that are com- monly used in the literature.

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Paper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0602.

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Length: 26 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:smu:ecowpa:0602
Contact details of provider: Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
Phone: 214-768-2715
Fax: 214-768-1821
Web page: http://www.smu.edu/economics

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  1. Maasoumi, Esfandiar & Racine, Jeff & Stengos, Thanasis, 2007. "Growth and convergence: A profile of distribution dynamics and mobility," Journal of Econometrics, Elsevier, vol. 136(2), pages 483-508, February.
  2. Chen, Jian & Fleisher, Belton M., 1996. "Regional Income Inequality and Economic Growth in China," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 141-164, April.
  3. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  4. Kanbur, Ravi & Zhang, Xiaobo, 2001. "Fifty Years Of Regional Inequality In China: A Journey Through Revolution, Reform And Openness," Working Papers 7236, Cornell University, Department of Applied Economics and Management.
  5. Jeff Borland & Joe Hirschberg & Jenny Lye, 2001. "Data reduction of discrete responses: an application of cluster analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 8(3), pages 149-153.
  6. S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
  7. Peter Pedroni & James Yudong Yao, 2005. "Regional Income Divergence in China," Department of Economics Working Papers 2005-03, Department of Economics, Williams College.
  8. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
  9. Hirschberg, J.G. & Maasoumi, E. & Slottje, D.J., 2001. "Clusters of Attributes and Well-Being in the US," Department of Economics - Working Papers Series 778, The University of Melbourne.
  10. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, vol. 7(1), pages 1-21.
  11. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
  12. Hong Li & Zinan Liu & Ivonia Rebelo, 1998. "Testing the Neoclassical Theory of Economic Growth: Evidence from Chinese Provinces," Economic Change and Restructuring, Springer, vol. 31(2), pages 117-132, May.
  13. C. W. Granger & E. Maasoumi & J. Racine, 2004. "A Dependence Metric for Possibly Nonlinear Processes," Journal of Time Series Analysis, Wiley Blackwell, vol. 25(5), pages 649-669, 09.
  14. Martin Raiser, 1998. "Subsidising inequality: Economic reforms, fiscal transfers and convergence across Chinese provinces," Journal of Development Studies, Taylor & Francis Journals, vol. 34(3), pages 1-26.
  15. Li, Hong & Liu, Zinan & Rebelo, Ivonia, 1998. " Testing the Neoclassical Theory of Economic Growth: Evidence from Chinese Provinces," Economic Change and Restructuring, Springer, vol. 31(2-3), pages 117-32.
  16. Lixin Colin Xu & Heng-fu Zou, 2000. "Explaining the Changes of Income Distribution in China," CEMA Working Papers 473, China Economics and Management Academy, Central University of Finance and Economics.
  17. Liu, Zhenjuan & Stengos, Thanasis, 1999. "Non-linearities in Cross-Country Growth Regressions: A Semiparametric Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 527-38, Sept.-Oct.
  18. Luisa Corrado & Ron Martin & Melvyn Weeks, 2005. "Identifying and Interpreting Regional Convergence Clusters across Europe," Economic Journal, Royal Economic Society, vol. 115(502), pages C133-C160, 03.
  19. Bart Hobijn & Philip Hans Franses, 2000. "Asymptotically perfect and relative convergence of productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 59-81.
  20. 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.
  21. Demurger, Sylvie & Sachs, Jeffrey D. & Woo, Wing Thye & BAO, Shuming & Chang, Gene, 2002. "The relative contributions of location and preferential policies in China's regional development: being in the right place and having the right incentives," China Economic Review, Elsevier, vol. 13(4), pages 444-465, December.
  22. Anuradha Dayal-Gulati & Aasim M. Husain, 2000. "Centripetal forces in China's Economic Take-Off," IMF Working Papers 00/86, International Monetary Fund.
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