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Geography, Economic Policy and Regional Development in China


Sylvie Démurger


University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Jeffrey D. Sachs


Columbia University - Columbia Earth Institute; National Bureau of Economic Research (NBER)

Wing Thye Woo


University of California, Davis - Department of Economics

Shu Ming Bao


University of Michigan at Ann Arbor - China Data Center

Gene Hsin Chang


University of Toledo

Andrew D. Mellinger


Harvard University - Center for International Development (CID)

March 2002

Harvard Institute of Economic Research Paper No. 1950

Abstract:     
Many studies of regional disparity in China have focused on the preferential policies received by the coastal provinces. We decomposed the location dummies in provincial growth regressions to obtain estimates of the effects of geography and policy on provincial growth rates in 1996?99. Their respective contributions in percentage points were 2.5 and 3.5 for the province-level metropolises, 0.6 and 2.3 for the northeastern provinces, 2.8 and 2.8 for the coastal provinces, 2.0 and 1.6 for the central provinces, 0 and 1.6 for the northwestern provinces, and 0.1 and 1.8 for the southwestern provinces. Because the so-called preferential policies are largely deregulation policies that have allowed coastal Chinese provinces to integrate into the international economy, it is far superior to reduce regional disparity by extending these deregulation policies to the interior provinces than by re-regulating the coastal provinces. Two additional inhibitions to income convergence are the household registration system, which makes the movement of the rural poor to prosperous areas illegal, and the monopoly state bank system that, because of its bureaucratic nature, disburses most of its funds to its large traditional customers, few of whom are located in the western provinces. Improving infrastructure to overcome geographic barriers is fundamental to increasing western growth, but increasing human capital formation (education and medical care) is also crucial because only it can come up with new better ideas to solve centuries-old problems like unbalanced growth.

Number of Pages in PDF File: 63

Keywords: China's Regional Growth Pattern, Economic Geography, Preferential Policies, China's Western Region Development Strategy

JEL Classification: D300, O180, O530, P250, P520, R110, R120

working papers series


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Date posted: October 10, 2001  

Suggested Citation

Démurger , Sylvie and Sachs, Jeffrey D. and Woo, Wing Thye and Bao, Shu Ming and Chang, Gene Hsin and Mellinger, Andrew D., Geography, Economic Policy and Regional Development in China (March 2002). Harvard Institute of Economic Research Paper No. 1950. Available at SSRN: http://ssrn.com/abstract=286672 or http://dx.doi.org/10.2139/ssrn.286672

Contact Information

Sylvie Démurger
University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )
93, chemin des Mouilles
Ecully, 69130
France
(33 4) 72 86 61 05 (Phone)
(33 4) 72 86 60 90 (Fax)
HOME PAGE: http://www.gate.cnrs.fr/spip.php?article22
Jeffrey D. Sachs
Columbia University - Columbia Earth Institute ( email )
314 Low Library
535 West 116th Street, MC 4327
New York, NY 10027
United States
212-854-8704 (Phone)
212-854-8702 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Wing Thye Woo (Contact Author)
University of California, Davis - Department of Economics ( email )
One Shields Drive
Davis, CA 95616-8578
United States
530-752-3035 (Phone)
530-752-9382 (Fax)
HOME PAGE: http://www.econ.ucdavis.edu/faculty/woo/woo.html
Shu Ming Bao
University of Michigan at Ann Arbor - China Data Center ( email )
1080 S. University
Ann Arbor, MI 48109-1106
United States
734-647-9610 (Phone)
734-764-5540 (Fax)
Gene Hsin Chang
University of Toledo ( email )
Department of Economics
Toledo, OH 43606
United States
419-530-4677 (Phone)
419-530-7844 (Fax)
Andrew D. Mellinger
Harvard University - Center for International Development (CID) ( email )
One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States
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