Empirics For Economic Growth And Convergence In The Yangtze River Region

Unbalanced development of regional economy has been for a long time the main feature of Chinese economy, and this kind of imbalance is especially evident in the Yangtze River Region.The purpose of this thesis is to study the income convergence and long-run economic growth of this region at the province level during the period of 1985-2002, using a panel data approach.In the introduction, we ask three important questions: (1) Have provinces of the Yangtze River Region been experiencing unbalanced development? (2) Are Yangtze River Region's provincial incomes as a system converging or diverging? (3) Why are sources of provincial income convergence or divergence? hi particular, what is the role of human capital, infrastructure, degree of openness and economic structure in the provincial long-run economic growth?Through a detailed analysis of the present situation, affecting factors and reasons, this thesis discusses the main problems of the unbalanced economies between the upper, middle and lower reaches of the Yangtze River Region. After that, we do some empirical studies by building two econometric models, which are based on the theory of economic growth. Based on the augmented Solow growth model, we build the first model, with the inclusion of two more variables, infrastructure and foreign direct investment. Our findings are consistent with the findings of the Solow-model-based panel data studies among other regions: there is no absolute income convergence during the specified period. At the same time, there are conditional convergence after we control for some factors that may lead to different steady states. But the convergence speed is too low to be satisfactory. To address the role of economic structure, we build a second model to take the factors of industrial structure, investment structure and consumption structure into account.In light of the above-mentioned statistical and empirical studies, we put forward some development strategies in the hope of achieving more balanced and sustainable growth among this region.