International integration and the determinants of regional development in China

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 a more moderate development. To obtain broad continuos 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: (1) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (2) 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. Extending the model using an unbalanced panel leads to a positive effect of the quality of governance and institutions on development. Copyright UNU-WIDER 2011Regional development, FDI, International integration, China, J24, O14, O18, O33, O40, R55,

Foreign direct investment and regional economic development in Russia: an econometric assessment

“…(2011), Gries and Redlin (2011), and Jiang (2012), we also estimated a system generalized method-of-moments (GMM) dynamic model that adopts a non-lagged FDI variable and explicitly deal with its endogeneity with the dependent variable lnGRP in order to check the statistical robustness of the FDI variables. With regard to the system GMM dynamic models, we cannot conduct the Sargan test of overidentifying restrictions with robust standard errors.…”

Regional disparity, transitional dynamics and convergence in China

“…Examples focusing on the concept of σ-convergence includeLyons (1991),Chen and Fleisher (1996),Tsui (1996),Raiser (1998),Zheng et al (2000),Chang (2002),,Duan (2008),Zou et al (2008),Zhou and Zou (2010). For the studies of β-convergence, seeChen and Fleisher (1996),Jian et al (1996), Gunlach (1997,Raiser (1998),Tian (1999),Chen and Feng (2000),Choi and Li (2000),Dacosta and Carroll (2001),Yao and Zhang (2001a),Yao and Zhang (2001b),Cai et al (2002),Yao and Zhang (2002),Weeks and Yao (2003),Wu (2004),Duan (2008),Hao (2008),Li and Xu (2008),Zou et al (2008),Villaverde et al (2010),Gries and Redlin (2011),Marti et al (2011). For more detailed literature reviews, seeWu (2004) andCheong (2012).…”

East Asia Regional Integration: A Concern on Economics and Human Development

“…In other words, the studies were focus on a specific country only. Those are studies by [12] on Estonia for integration with EU, [13] on China and [14] on Cambodia. Very few attempts made in the past to look at the integration of the countries base on human development as the present study attempts to do.…”