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Reform, Interaction of Policies, and Economic Growth: Evidence from China’s Provincial Panel Data |
| CHEN Zhao1, LU Ming2, YAN Ji3 |
| 1.China Center for Economic Studies, Fudan University, Shanghai 200433, PRC; 2.Department of Economics, Employment and Social Security Research Center, and China Center for Economic Studies, Fudan University, PRC; 3.Department of Economics, Washington University, 205 Eliot Hall, Campus Box 1208, St. Louis, MO 63130-4899, USA; |
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Abstract Based on provincial panel data, we tested the effects of openness, denationalization, fiscal reform, and their interactions on Chinese regional economic growth. We found the following: (1) Openness, especially the growth of foreign-direct-investment/gross-domesticproduct ratio, has been important in enhancing China s growth since the mid-1980s, while this effect is not so significant in western China. (2) Fiscal reform is another significant factor for economic growth. If local governments deregulate, higher growth will be obtained. In particular, reducing extrabudget expenditure helps push economic growth, especially in western China. (3) The interaction of economic policies, such as openness, denationalization, and fiscal reform, also plays an essential role in local economic growth. Both for the whole nation and for the eastern area, denationalization does not affect growth independently but expands the effects of deregulation. (4) After controlling economic policies and their interactions, conditional convergence exists. (5) With other factors controlled, eastern China achieved higher growth, while the middle and western areas did not differ significantly in growth. (6)Western China, where policy variables have lower explanatory power for growth, has a growth pattern different from those of the eastern and middle areas.
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Issue Date: 05 March 2006
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