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Growth and Regional Inequality in China During the Reform Era

  • Derek C. Jones

    ()

  • Cheng Li

    ()

  • Ann L. Owen

    ()

Chinese city-level data indicate that differences in growth rates are far more severe than indicated in previous studies which typically use data at higher levels of aggregation. We estimate growth equations using city-level data and find that the policy of awarding a special economic zone status enhances growth substantially, increasing annual growth rates by 5.5 percentage points. Annual growth rates of open coastal cities are, on average, 3 percentage points higher. Our qualitative results on the role of policy and the effects of FDI are similar to those of earlier studies that have employed provincial-level data; but, quantitatively, our results are substantially different. We also provide evidence of an indirect role of policy in the growth process through its ability to attract growth-enhancing foreign direct investment.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-561.

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Length: 34 pages
Date of creation: 20 Jun 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-561
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