Trends in Regional Inequality in China

Abstract

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Foreign Direct Investment and Regional Inequality in China

“…Hence, the process of absolute convergence has not been noted in the entire post-reform period. This finding is rather similar to those offered by Chen and Fleisher (1996) and Jian, Sachs, and Warner (1996) in which the former show NO absolute β-convergence in both the pre-and post-reform periods, while the latter suggested a mixed result with no clear absolute β-convergence.…”

“…For example, Lyons (1991) and Tsui (1991) show a slight decline in inequality during 1978-87 and an increase in inequality by comparing the early 1980s with the 1950s. Sachs and Warner (1996) find evidence of convergence from 1952 to 1965 and divergence from 1965 to 1978. Since the late 1980s, however, Sachs and Warner observe a widened income gap between coastal and non-coastal regions.…”

“…To examine absolute β-convergence, the simple regression that was suggested in Baumol (1986) and applied in Chen and Fleisher (1996), Jian, Sachs and Warner (1996), Gundlach (1997), Raiser (1998), Zhang (2001 and Yao and Zhang (2001b) will be adopted in this research, to regress the growth rate of real GDP (RGDP) per capita against the beginning period's level of RGDP per capita. The regression function is specified as:…”

“…Furthermore, they find that intra-regional disparities declined during the reform period but interregional inequality experienced little improvement. Jian, Sachs and Warner (1996) argue that real income convergence of Chinese provinces was a relatively recent phenomenon, emerging strongly only since the reform period began in 1978. After 1990, however, regional incomes diverged again.…”

“…One group of articles has decomposed the Gini coefficient of mainland China in order to explain the causes of income inequality, and find that rural-urban inequality and spatial inequality are the causes of such inequality (Tsui 1996;Yao 1999;Yao and Zhang 2001a;Gustafsson and Shi 2002). Some articles employ the classical approach and the concepts of β-and σ-convergence to address the spatial pattern of China's economic growth and income inequality (Jian, Sachs and Warner 1996;Gundlach 1997;Raiser 1998;Démurger 2001;Zhang 2001;Yao and Zhang 2001b). In this study, the σ-and β-convergence tests in absolute and conditional convergence with respect to per capita real GDP will be applied.…”