Content area
Abstract
China's real GDP grew at about 9% per year during the last two decades. The last two decades have seen great economic achievements in China. However, as the society advanced, many economic issues emerged and have remained unresolved. This thesis addresses three important issues.
Similar to the case of the “Four Asian Tigers”, a hotly debated question is raised in the literature: Is this extraordinary growth rate of China due only to factor accumulation or to a large degree due to improvement in technology and efficiency? In Chapter 2, I estimate TFP growth rates of Chinese provinces using two different models. The average TFP growth rate estimated by the fixed-effect model is 4.9%. However, this approach assumes full efficiency, i.e., the TFP growth rates we estimate includes both technical changes and technical efficiency changes. The average technical change rate estimated by a stochastic frontier model is estimated to be about 2.7%, higher than Young (2000)'s estimate of TFP growth rate. It shows that China has benefited significantly from technological improvement.
Chapter 3 addresses the question of convergence: Does conditional convergence exist among Chinese provinces? A neoclassical growth model is adopted and tested. Then an equation is formulated for testing convergence as a dynamic panel data model, and fixed-effect estimators are used to estimate it. Convergence is detected and the convergence rate is calculated.
Chapter 4 studies the relationship between regional inequality and economic growth in the case of China. In this study, I use a dataset consisting of the standard deviations of per capita income, per capita GDP growth rate, and the labor force of all the 30 provinces (metropolitan areas) from 1952 to 1998, to estimate the effect of regional disparity on economic growth of Chinese provinces during the reform period. A positive relationship is detected between regional inequality and economic growth of China. However, the positive relationship is not significant during the reform period.
