Abstract
This paper presents an empirical analysis to improve our understanding of the catch-up and convergence tendencies of total factor productivity (TFP) growth across the Chinese provinces over 2003–2012. After controlling for the province heterogeneity, our regression results show that the Chinese provinces exhibit significant conditional convergence in TFP growth over the sample period. This indicates that province-specific factors play an important role in determining provincial TFP growth. Economic policies conducive to faster TFP growth should thus be directed to the relevant factors underlying the province heterogeneity. This paper suggests that openness to international economic activities and human capital accumulation are two important factors that promote TFP growth, both of which rely on a salutary social infrastructure.
Highlights
1.1 MotivationChina has been one of the fastest growing economies in the world in the past 35 years
After controlling for the effects of province-specific factors, our regression results show that the Chinese provinces exhibited significant conditional convergence in total factor productivity (TFP) growth
Our analysis suggests that openness to international economic activities and human capital accumulation are two important factors that promote TFP growth, both of which rely on a salutary social infrastructure
Summary
1.1 MotivationChina has been one of the fastest growing economies in the world in the past 35 years. It is important for policymakers to gauge the relative contributions of capital accumulation and TFP growth to income growth as this information is useful in making necessary policies to counteract the rising trend of interregional disparity in China. The main objective of this paper is to explore the characteristics of interregional TFP disparity in China and to provide an empirical analysis that will enrich our understanding of the catch-up and convergence processes of the Chinese regions regarding TFP. Our empirical analysis shows that province-specific factors play an important role in determining provincial TFP growth. After controlling for the effects of province-specific factors, our regression results show that the Chinese provinces exhibited significant conditional convergence in TFP growth. Our analysis suggests that openness to international economic activities and human capital accumulation are two important factors that promote TFP growth, both of which rely on a salutary social infrastructure
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