Openness, Economic Growth and Regional Disparities: The Case of China

340 Pages·2014·3.518 MB·English

by  Yanqing Jiang (auth.)

Yanqing Jiang
Openness, Economic
Growth and
Regional Disparities
The Case of China
Openness, Economic Growth and Regional
Disparities

Yanqing Jiang
Openness, Economic Growth
and Regional Disparities
The Case of China
YanqingJiang
CollegeofInternationalFinanceandCommerce
ShanghaiInternationalStudiesUniversity
Shanghai,China,People’sRepublic
ISBN978-3-642-40665-2 ISBN978-3-642-40666-9(eBook)
DOI10.1007/978-3-642-40666-9
SpringerHeidelbergNewYorkDordrechtLondon
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Preface
Thisbookgrewoutofmyownresearchworkinrecentyears.Thebookconsistsof
empiricalstudiesfocusingonvariousissuesregardingopenness,economicgrowth
and regional disparities in China. Initially, many chapters of this book were
presentedasaseriesofself-containedpapersbasedonthegeneralthemeofChina’s
growth and opening up. Changes were then made to these papers (chapters) and
newchapterswereadded,withthefinishedproducttakingitscurrentform.Despite
the use of cross-references from time to time between chapters, each chapter is
sufficiently self-contained and can thus be read on its own, which improves the
usefulnessofthebookasatext.
Thewritingofthisbookwouldnothavebeensuccessfullyaccomplishedwithout
thosepeoplewhohavehelpedmeinmanyways.Firstofall,Iwouldliketoexpress
my deepest gratitude to Toby Chai, Editor for Business/Economics at Springer
Beijing: thank you very much for your efficient help and continuous support
throughout the entire process. I also extend my sincere gratitude to Dr. Jinghai
Zheng,AssociateProfessorattheUniversityofGothenburg,forallthethoughtful
andconstructivecommentsonalmosteveryaspectofthebook’sproposedcontents,
with which I have improved the work substantially. I owe special thanks to
numerous colleagues of mine at the College of International Finance and Com-
merce, Shanghai International Studies University. I thank all these colleagues for
theirencouragement,helpandsupportalongtheway.Theeditorialandproduction
staff at Springer have done an excellent job of turning the manuscript into a final
product.Iamdeeplygratefultothesepeoplefortheirefforts.
Idedicatethisbooktomyfamilywhohasalwaysbeenthereformeandwhose
love, understanding and unwavering support have been a never-ending source of
encouragement.
Shanghai,China YanqingJiang
November2012
v

Contents
1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 WhyStudyChina?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OpennessandItsPotentialImpacts. . . . . . . . . . . . . . . . . . . . . . 3
1.3 OrganizationoftheBook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 OutputGrowthandProductivityGrowthinChina. . . . . . . . . . . . 7
2.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 China’sProductivityGrowth:ABriefLiteratureReview. . . . . . 9
2.3 TheTheoreticalFramework. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 MeasuringTotalFactorProductivityinChina. . . . . . . . . . . . . . 19
2.5 ConcludingRemarks. . . . . . . . .. . . . . . . . . .. . . . . . . . . .. . . . 25
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3 GrowthandConvergenceacrosstheChineseRegions. . . . . . . . . . 27
3.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.2 GrowthandConvergence:TheSolowModel. . . . . . . . . . . . . . . 29
3.3 GrowthRegressionasaDynamicPanelDataModel. . . . . . . . . . 31
3.4 EconometricIssuesandData. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4.1 EconometricIssues. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4.2 DataandtheVariables. . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.5 EstimationResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.6 IncludingHumanCapitalinPanelDataRegressions. . . . . . . . . . 47
3.7 ConcludingRemarks. . . . . . . . .. . . . . . . . . .. . . . . . . . . .. . . . 50
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
vii
viii Contents
4 OpennessandRegionalGrowthinChina. . . . . . . . . . . . . . . . . . . . 55
4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.2 LiteratureReview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.3 TheModel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.4 TheEstimationMethods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.5 TheDataandVariables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.6 EstimationResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.7 InclusionofHumanCapital. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.8 TheIssueofSpatialInterdependence. . . . . . . . . . . . . . . . . . . . 76
4.9 ATentativeAnalysisoftheIndividualProvinceEffects. . . . . . 78
4.10 ConcludingRemarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5 Openness,HumanCapital,andProductivityGrowth
intheChineseRegions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.2 MeasuringTotalFactorProductivity. . . . . . . . . . . . . . . . . . . . 87
5.3 ModelingProductivityGrowth. . . . . . . . . . . . . . . . . . . . . . . . 91
5.4 EmpiricalAnalysisandResults. . . . . . . . . . . . . . . . . . . . . . . . 94
5.5 IncorporatingHumanCapital.. . . . . . . . . .. . . . . . . . . . .. . . . 96
5.5.1 SpecifyingtheProductionFunction. . . .. . . . . . . . . . . . 96
5.5.2 MeasuringPhysicalCapitalStock. . . . . . . . . . . . . . . . . 97
5.5.3 MeasuringperWorkerHumanCapitalStock. . . . . . . . . 98
5.5.4 MeasuringTFPasaResidual. . . . . . . . . . . . . . . . . . . . 99
5.6 TheAugmentedModel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
5.6.1 TheTheoreticalModel. . . . . . . . . . . . . . . . . . . . . . . . . 101
5.6.2 TheEmpiricalModel. . . . . . . . . . . . . . . . . . . . . . . . . . 102
5.7 NewEstimationResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
5.7.1 EstimationResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
5.7.2 RobustnessChecks. . . . . .. . . . . .. . . . . . .. . . . . . .. . 108
5.8 ConcludingRemarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6 ForeignDirectInvestmentandRegionalProductivity
GrowthinChina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
6.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
6.2 LiteratureReview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
6.3 PreliminaryAnalysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
6.4 TheBasicModel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
6.5 TheAugmentedModel . .. . . .. . . . .. . . .. . . .. . . . .. . . .. . 128
6.6 ConcludingRemarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Contents ix
7 EndogenousSaving,InterregionalCapitalMobility,
andConvergenceacrossChina. . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.2 TheRamsey-Cass-KoopmansModel. . . . . . . . . . . . . . . . . . . . 138
7.3 TheExtendedModelwithTwoTypesofCapital. . . . . . . . . . . 141
7.4 EmpiricalAnalysisandResults. . . . . . . . . . . . . . . . . . . . . . . . 144
7.4.1 TheSetupoftheEmpiricalModel. . . . . . . . . . . . . . . . 144
7.4.2 DataandSamples. . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
7.4.3 TheRegressionResults. . . . . . . . . . . . . . . . . . . . . . . . 147
7.5 SpeedofConvergenceintheCaseofPartial
CapitalMobility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.6 ATentativeAnalysisontheImpactofInvestment
Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
7.7 TheModelReconsidered:AllowingforTime-Varying
IntertemporalPreferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
7.8 ConcludingRemarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
8 InputsBeyondCapitalandLabor,theNeoclassicalGrowth
Framework,andLimitstoGrowthinChina. . . . . . . . . . . . . . . . . . 161
8.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
8.2 TheModel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
8.3 TheRegressionModels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
8.4 EstimationIssuesandData. . . . . . . . . . . . . . . . . . . . . . . . . . . 172
8.5 EstimationResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
8.6 TheValuesoftheParameters. . . . . . . . . . . . . . . . . . . . . . . . . 178
8.7 AnAlternativeModel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
8.8 TheSpeedofConvergence. . . . . . . . . . . . . . . . . . . . . . . . . . . 183
8.9 FurtherExtensionoftheModels. . . . . . . . . . . . . . . . . . . . . . . 184
8.10 ConcludingRemarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Appendix:AnExtendedSolowGrowthModel
withLandandNaturalResources. . . . .. . . . .. . . . .. . . . .. . . . . .. . 188
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
9 IndustryMixandInterregionalDisparitiesinChina. . . . . . . . . . . 195
9.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
9.2 AGrowthAccountingFrameworkandDescriptiveStatistics. . . 197
9.3 DecomposingProductivityGrowth. . . . . . . . . . . . . . . . . . . . . 203
9.4 IndustryMixandLaborProductivity. . . . . . . . . . . . . . . . . . . . 207
9.5 SomeEmpiricalAnalysisandResults. . . . . . . . . . . . . . . . . . . 210
9.5.1 VarianceDecomposition. . . . . . . . . . . . . . . . . . . . . . . 210
9.5.2 EffectsofSocialInfrastructure. . . . . . . . . . . . . . . . . . . 213