Abstract
This study investigates the effects of three international technology diffusion (ITD) channels on regional economic convergence (REC): inward foreign direct investment (IFDI), outward foreign direct investment (OFDI) and imports. Based on Chinese provincial-level data, econometric results suggest a converging trend of per capita income levels in China during 2004-2009. This study also confirms that IFDI has a negative effect on REC. This is due to the concentration of IFDI in comparatively developed regions (CDRs) and weak absorptive capacity of less developed regions. OFDI in developed countries (DCs) has a positive effect on REC, however, OFDI in transitional and emerging economies (TEEs) will lead to a wider income gap. In addition, imports fail to promote REC because of a high volume of imports of goods instead of services, as well as a concentration of capital goods. This study further confirms the convergence pattern of East, Middle and West China.
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