Research On China's Regional Income Disparity From Total Factor Productivity

The problem of regional income disparity becomes more and more serious along with the rapid growth of China's economy. Focuses on this problem, many scholars have researched and advanced various theories from the different angle. Some of these theories are the same, some of these are similar, but some are contradictory. This indicated that the regional income disparity has not formed t mature theory and there is still many insufficiencies about this problem. So, for us, it is worth researching and discussing thoroughly.This paper analyses the formation, development, change and the reason of Chinese regional income disparity from the angle of total factor productivity (TFP). The article summaries comprehensively the theories and result of research of scholars both in the domestic and foreign about Chinese regional income disparity and TFP and investigates the present situation and it's development form 1978 to 2005.The result indicates that national scope and four main areas exist the trend of decrease of income over 1978 to 1982, except this, different areas have different trend in different period. Then calculates the TFP of Chinese twenty-eight provinces and carries out level decomposition and the variance decomposition of the regional income disparity. The result shows that different total factor productivity of different provinces is an important reason that creates the China's regional income disparity. The total factor productivity can explain the regional income disparity to some extent. Finally, the paper put forward some policy proposals in view of the different areas situation based on above conclusion of analysis.