STRUCTURAL CHANGES IN CHINA'S ECONOMIC GROWTH DURING THE REFORM PERIOD

Abstract

We identify some empirical evidences for the structural changes in the determinants of regional growth, disparities and the convergence speed to the per capita GDP equilibrium during the reform period of 1978–1998 in China. We estimate a growth regression model by augmenting the Solow model with a provincial‐level panel data set. The existence of conditional convergence is confirmed throughout the reform period, but the convergence speed is faster in the 1990s than the early reform period. Agro‐industry‐based rural development contributed to regional growth and eased interregional disparities in the early reform period. Foreign capital inflows took a significant leading role for regional growth during the 1990s, but aggravated interregional disparities. Education and non‐state enterprises were among the other keys for regional growth throughout the reform period. These results implies that for achieving sustainable and balanced growth in future, it is essential to extend foreign capital investment to the interior regions, in association with further development of human capital resource and non‐state local enterprises.