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Regional Heterogeneity and China's Trade: Sufficient Lumpiness or Not?

15 Pages Posted: 19 Apr 2012  

Meng Lu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP); University of Nottingham - School of Economics

Chris Milner

University of Nottingham - School of Economics

Zhihong Yu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP)

Date Written: May 2012

Abstract

This paper explores whether there is sufficient lumpiness or heterogeneity in the relative endowments (capital, labor, and skills) of the regions of China to affect China's specialization and trade patterns. It does so using both the lens condition to identify the violation of factor price equalization across regions, and direct evidence on regional trade and specialization. The results are sensitive to the level of regional aggregation. The paper concludes, however, that China was sufficiently lumpy as recently as 2004 to affect its pattern of international trade.

Suggested Citation

Lu, Meng and Milner, Chris and Yu, Zhihong, Regional Heterogeneity and China's Trade: Sufficient Lumpiness or Not? (May 2012). Review of International Economics, Vol. 20, Issue 2, pp. 415-429, 2012. Available at SSRN: https://ssrn.com/abstract=2042444 or http://dx.doi.org/10.1111/j.1467-9396.2012.01030.x

Meng Lu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Chris Milner

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Zhihong Yu

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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