Economic growth across space and time: subprovincial evidence from Mainland China
This paper considers the persistent differences in economic performance across Chinese regions. We introduce a new county- and city-level dataset that spans all of mainland China and provides a detailed view of Chinese regional growth over the period 1997-2005. Non-parametric kernel density estimation is employed to establish the cross-sectional GDP per capita distribution, and the distributional dynamics are investigated using the probability matrix technique and associated stochastic kernel estimator. A set of explanatory variables is then introduced, and several regressions are run to test for conditional ƒÒ-convergence and to pinpoint influential factors for economic growth across counties and cities.
Introduction: China’s macroeconomic growth performance over the last decade has been nothing less than phenomenal. GDP has grown at the blistering pace of 8 per cent pa. The expansion of China’s role in world trade has been no less remarkable, its overall share in world trade rising from less than 1% in 1979 to 6% in 2005. And, according to the World Bank, eco-nomic growth has contributed to rapidly falling poverty rates in China. From 1994 to 2004, the portion of population living below the poverty line declined from 35% to 17% in rural China, and from 0.90% to 0.30% in Chinese cities.Despite these remarkable achieve-ments, much debate and attention has focussed on China’s uneven regional developments. Urban and rural standards of living continue to be poles apart. Rural prefectures and town-ships still struggle to come to grips with basic healthcare and education provision. Despite commitments from the central government to implement a new medical insurance scheme and free education, outlays on health care and education as a proportion of total spending remain lower than they were a decade ago.effectiveness of interest rates as a policy tool has been modest (see eg Laurens and Maino 2007 and Mehrotra 2007a).
Author: Declan Curran, Michael Funke, Jue Wang
Source: Institute for Economies in Transition, Bank of Finland
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