China's Inter-provincial Economic Growth Convergence

Since the American economist Baumol presented the convergence hypothesis, Hesperian economists have done plenty of research both on pure theory and empirics. Through the argument between the New-classical growth theory and the Endogenous growth theory, and empirics research done by Baumol & De Long, Barro & Sala-I-Martin, MRW, Durlauf & Quah, they developed the empirical method gradually such as cross-section data analysis, panel data data analysis, time series data analysis and distribution dynamic. Domestic scholars were going to analysis China's economic growth by convergence method.This dissertation is based on empirical framework aboard, using the domestic production, it mainly analyses China's convergence among provinces from 1985 to 2004. The descriptive analysis reveals the convergence among provinces, the testing analysis tests whether the convergence happened, and estimates the convergence speed under different condition. By constantly correcting the omission in former research, this dissertation is striving to use the precise method to assure the result approaches the reality.The dissertation is organized as falls: Chapter one reviews the convergence theory and empirical method aboard, and then summarizes the domestic research, and point out some questions. Chapter two introduces the empirical method this dissertation chose, and the reason I chose it, then introduces the treatment to the data. Chapter three is the empirical research. To analysis the Chinese economic growth by the Theil index, I discover the economic growth of this twenty years ought to divide into two period, the growth converge from 1985 to 1990, and diverge from 1991 to 2004; and between the provinces, the growth exist "club convergence" phenomenon. To test the result, this dissertation tests the cross-section data, but failure to make a strong conclusion, because the R~2 of the equation is too low. Through the analysis of panel data, the result concluded by the Theil method was remarkable, and then gives the speed of convergence or divergence. The analysis by the distribution dynamic way shows that the income among provinces is forming a "twin peak". Chapter four is the main conclusion, contribution and limitation of this dissertation. The main points and new ideas in this paper are as foliowings:1. Through the empirics, it divides the last twenty year into two period, 1985 to 1990 and 1991 to 2004.2. It oppugns the grouping of provinces by Cai Fang, and give out the new grouping and the principle of it.3. It oppugns the cross-section analysis by some other researchers, it decidedly deserts the result when the R~2 is too low.4. It analysis the convergence by the distribution dynamic method, and then describe the movement of the distribution in last twenty years.