Regional growth in China under economic reforms

This article uses both cross-section and panel data approaches to Study regional growth in China. Inter-regional income inequality increased (sigma divergence), the rich regions became richer but poor regions poorer (beta divergence), over the data period 1978-95. This contradicts results from other cross-region country, studies shown by Sala-i-Martin [1996] and some earlier studies on China. Only after controlling for regional effects, population growth, and investment in both physical and human capital do the data show significant beta-convergence. More interestingly, the degree of openness and transportation are two other important factors responsible for differences in regional growth. This finding has important implications for regional development policy.