An Empirical Study On Regional Economic Convergence In China

The regional economic gap is widening in recent years in China. Meanwhile, what has become the strategic focus of China's economy work in its "11th Five-Year Plan", is controlling and narrowing the regional economic gap, realizing the coordinated development of regional economy. What is opposite to the issue of regional economic growth gap is the issue of economic growth convergence which is paid attention by theoretical and academic circles.The issue of economic growth convergence has resulted lots of controversy in theoretical and academic circles. Neo-classical growth theory figured out that, as the marginal benefit of capital reduced in production, with the inter-regional free movement of factors, less backward areas with less capital stock per capita would due to higher faster capital gains and growth rate than the more developed regions with more capital stock per capita, thereby catching up with the economically developed areas, inter-regional output per capita will tend to balance out and the regional economic growth convergence. Against neo-classical growth theory's defects of treating technical advancement as exogenous, new theory of economic growth treats the technical advancement as endogenous, questioned the theory of convergence. Meanwhile, some can be found for the low-income countries or regions to speed up economic growth and narrow the gap between the regional economic factors in new theory of economic growth.In recent years, at home and abroad have a great deal of study of China's regional economic growth convergence results. However, there is still a large dispute on their views of China's regional economic convergence. So, naturally, we will have two doubts, in the end China's regional economic growth is the convergence or not convergence, Regional economic disparities in the long term is the expanding trend of a narrowing trend? What factors led to the growth of China's regional economic disparities this trend? Thus, it has higher theoretical and practical significance to further study regional economic growth convergence on the basis of previous research. Further in studying the literature course, we can not help but doubt also that, since the 1990s, China's economic growth in the regional convergence and regional economic disparities in the long-term there is a widening or narrowing trend? Capital and labor inputs, the right since the 1990s regional economic growth convergence of the impact, whether they lead to regional economic growth or the convergence of convergence? Both of these problems would become a paper attempted to answer the question.In this paper, in accordance with the above assumptions, we firstly studied literatures related to regional economic growth convergence. Then together with the purpose of this research, we discussed and presented our research methods, econometric model and measurement indicators to be used in our research. With the data of every province during 1990-2005, we empirically analyzed the trend of regional gap in economic growth, the relationship between capital & labor inputs and regional economic growth, and how capital and labor input affect regional economic growth gap. Finally concludes that, since the 1990s, especially since 1993, the regional economic growth is not significantly diminished, the difference in economic growth among the national provinces, among the three major inter-regional, among the eastern provinces and among western provinces, is significant broadening, but the central region. The difference in economic growth among central provinces seems to be controlled in certain rang. The regional differences of capital and labor investment indeed caused the expansion of difference in economic growth among the national provinces, among the three major inter-regional, among the eastern provinces and among western provinces; and contrarily helped narrow the gap between the central provinces. The role of capital and labor in promoting regional economic growth, differences between regions. It represents significantly more efficient in eastern region than the backward central and western regions, and also represents that it's differences among the eastern and western provinces than that in central region.The characteristics of this paper mainly reflected in that:Research content, based on investment and labor investment which are the two basic elements of economic growth and the basic starting point when neo-classical growth theory analysis the regional economic convergence, we studied regional economic growth convergence in China since the 1990s and their impact on this convergence.Research methods and models (1) when selecting our convergence test methods, we gave up theβconvergence test which is commonly used in many papers for a careful consideration of thatβconvergence test prone to misleading conclusions, and chose a simple and intuitive convergence test method ,theσconvergence test. (2) Based on the interchangeability between the convergence test of economic growth and the stationary test in time-series analysis, we selected the ADF unit root test as a tool of testing convergence trends and it's significant, compensate forσindex's shortcomings on analyzing long-term trends and significant. (3)Considering that theσindex can not test the convergence hypothesis and identify the relevant factors'impacts on the convergence of economic growth, we made a combination of the results ofσtests and the factors that impact economic growth, formed a model to measure the impact of capital and labor investment on the regional economic growth convergence, which is still seldom used in domestic. (4) Considering the model and the structure characteristics of the data we used, the advantages of panel data model and it's applicability of this paper, as a solution to guarantee the integrity of the study scope, we adopt the unbalanced panel data model as an important of empirical analysis the relationship between investment & labor investment and regional economic growth.