Evolution Of Core-periphery Pattern And Its Influence On Real Income Distribution In China: 1990-2003

By employing a combination of multivariate cluster analysis and factor analysis, this paper studies the evolution of core-periphery pattern in China since the 1990s. The study shows the existence of striking dual economy in China and the emergence of new cores since the reform and opening up drive in the late 1970s. Guangdong, Jiangsu, Zhejiang and Fujian have established their status as the core in the spatial pattern of China's economy, partly due to regional policy of "gradient shift" implemented in the 1980s in favor of China's coastal provinces.In regional economic theory, the core which is at the center of a nation's economy can influence other non-core areas through the following 2 ways: spillover effect and backwash effect. The final result of these effects can lead to the widening or diminishing of the regional income gap. Based on such theory, this paper points out the main reasons for the widening of regional income gap in China since 1990 are the emergence of new cores and the interaction between core and periphery. In order to prove this hypothesis, in the third part, this paper builds an econometric model based on a new aggregate production function incorporating a regional factor to capture the significant influence from the interaction between cores and peripheries. The results of the econometric model show that the core has gained 7%~10% advantage because of its control over peripheries, while the frontier, which is at the bottom of the rank, suffered 15%~20% loss because of the negative influence from regional interaction.This paper tries to interpret the widening gap of regional income in current China from a new perspective. Policies which can facilitate and strengthen the spillover effect and which can help the core function better as growth engine are needed to shorten the regional income gap.