Convergence Of Regional Economic Growth In China And Parameter Heterogeneity Research

Convergence of China's regional economic growth in recent years is a hot issue in the regional economic area, and there are large mount of literature appear since reform and opening up of China. Unfortunately, the existing literature shows inconsistent findings, and even contradictory, which may be caused by three reasons. The first reason due to data availability and quality, and the selection of indicators for related regional disparity estimates. The second is that different researcher used different sample time. As the regional disparity change over time, the different sample period may result in different conclusions. Finally the different researchers used the different methods and the models. However, the existing research literature considers only a single level of province or city in the data, ignoring the possible hierarchical structure between provinces, cities and regions. Therefore, this article use multilevel models test the convergence of regional economic growth based on city economic data, considering the hierarchical structure among the data and parameter heterogeneity. The results are expected to compensate the deficiencies of existing methods.This research is based on China's 210 cities economic development data in 1990-2007. We use multilevel model to analyze the convergence of China's regional economic growth in two different perspectives, and illustrate the necessity of using multilevel models in both theoretical and empirical points. We discuss in detail the heterogeneity of regional convergence of economic growth in different level of provinces, cities and areas. The results show that the convergence of China's economic growth is not widespread, but by the development of the regional base level of GDP; At a lower level of development in the region, there are significant local convergence, but in regions with higher levels of development there exists a trend of divergence, but divergence is not significant, which indicates the differences between cities in China have been improved to some extent. However, there are still significant differences among the provinces with a lower, medium and higher level of economic development, indicating unbalance of regional economic development still remain. In addition, the application of multi-level model also provides us a convenient and flexible research tool for studying parameter heterogeneity and the results give more reasonable and comprehensive explanation for the convergence characteristics of China's regional economic growth.