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Title:International integration and regional development in China PDF Logo
Authors:Gries, Thomas
Redlin, Margarete
Issue Date:2008
Series/Report no.:Research paper / UNU-WIDER 2008.66
Abstract:Concerns about the duration of China's growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China's high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced more moderate development. To obtain broad continous growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (i) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (ii) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China's provinces.Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Further, in contrast to implications from NEG models indicators for urbanization and agglomeration do not contribute significantly.
Subjects:international integration
regional development
FDI
China
JEL:J24
O14
O18
O33
O40
R55
ISBN:978-92-9230-116-3
Document Type:Working Paper
Appears in Collections:WIDER Research Papers, United Nations University (UNU)

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