What Makes Regions Grow? The Case of China

Master Thesis by Qiong Zhou
May 25, 2004

Abstract:

This thesis investigates the determinants of regional economic growth in China. A first look at the real per capita income of rural and urban households confirms that the urban-rural inequalities in China are increasing. However, real per capita income both in urban areas and in rural areas tend to converge. Given the special nature of China’s economy, the gradual transition process from a planned economy to a market one is examined, together with the cental government’s regional development strategies and reform policies. Both cross-sectional analysis and panel regression approaches are applied to data from 1985 to 2001. Furthermore, a few case studies are done. It is found (1) that geographic factors, development of private sector, foreign investment and quality of human resources are key determinants of regional growth in China; and (2) empirical evidence indicates that the convergence hypothesis held in China during the 1985-2001 period.