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The spirits that I've cited my commands ignore: how does Chinese regional policy affect the agglomeration process?

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  • Berthold, Norbert
  • Kullas, Matthias

Abstract

Regional GDP per capita disparities between the coastal and interior provinces of China seemto be a bugaboo the Chinese government cannot get rid of. This paper shows that there areagglomerative forces within China which emerge from the unbalanced growth strategy andlead to a considerably west to east migration of workers. Instead of reducing the disparities, migration actually worsens the problem. The knowledge that an agglomerative process takes place should have a decisive impact on regional policy. Therefore we examine whether thepolicy measures taken within the last years were appropriate to reduce regional inequitywithin China. We show that in the case of agglomerative forces the hukou system can reduce disparities while a reduction of trade costs between the interior and the coastal provinces leads to more inequity.

Suggested Citation

  • Berthold, Norbert & Kullas, Matthias, 2007. "The spirits that I've cited my commands ignore: how does Chinese regional policy affect the agglomeration process?," Discussion Paper Series 101, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
  • Handle: RePEc:zbw:wuewwb:101
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    1. Du, Yang & Park, Albert & Wang, Sangui, 2005. "Migration and rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 688-709, December.
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    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, vol. 63(2), pages 397-417, July.
    7. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    8. Paul Krugman, 1992. "A Dynamic Spatial Model," NBER Working Papers 4219, National Bureau of Economic Research, Inc.
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