Provincial Growth Research Articles

The Dynamics of Provincial Growth in China: A Nonparametric Approach

We use a recently developed non-parametric approach to analyze the variation in labor productivity growth across China's provinces. This approach imposes less structure on the data than the standard growth accounting framework and allows for a breakdown of labor productivity into capital deepening, efficiency gains, and technological progress. We find that capital deepening is the prime factor behind the change in the distributional dynamics of the labor productivity: on average capital deepening accounts for 75 percent of total labor productivity growth, while improvements in efficiency and technological progress account for 7 percent and 18 percent, respectively. We also find that while improvements in efficiency levels are higher in initially less productive provinces, relatively more productive provinces benefitted more from technological progress than less developed ones.

The Dynamics of Provincial Growth in China: A Nonparametric Approach

China's growth record since the start of its economic reforms in 1978 has been extraordinary. Yet, this impressive performance has been associated with an increasing regional income disparity. We use a recently developed nonparametric approach to analyze the variation in labor productivity growth across China's provinces. This approach imposes less structure on the data than the standard growth accounting framework and allows for a breakdown of labor productivity into capital deepening, efficiency gains, and technological progress. Like other studies before us, we do not find strong evidence of convergence in labor productivity across China's provinces during 1978-98. However, our results show that provinces converged in efficiency levels, while they diverged in capital deepening and technological progress.

What effect does the size of the state-owned sector have on regional growth in China?

This paper examines the effects state-owned enterprises (SOEs) have on China's economic growth. We present a simple and intuitive model of the political process, which predicts a larger state-owned sector will lead to lower growth rates. We then estimate regressions with various measures of and proxies for real output growth using a variety of other factors, including measures of the size of the state-owned sector, as regressors. We find a robust negative relation between the size of state-owned enterprises and the provincial growth rate. The estimates indicate that a decrease in the SOE share of industrial production by 10 percentage points increases real GDP growth the following year by between 0.7% and 1.2%. The average impact of a reduction in the SOE share in employment by 10 percentage points is between 1.6% and 2.3%.

China’s regional disparity in 1981–2000: Openness and development of non-state-owned enterprises and fiscal decentralization

While China’s economic growth has been impressive since 1978, regional disparity in terms of provincial per capita GDP has been increasing. On the other hand, this rapid but uneven growth was accompanied by China’s deepening openness and structural reforms including the development of non-state-owned enterprises (non-SOEs) and fiscal decentralization. Based on quantitative analyses, this paper tries to explore the features of regional disparity in China and the relationships between regional growth and China’s openness and economic structure reforms in the period from 1981 to 2000. The paper finds that the catching-up of the coastal region to the initially rich provinces, which are mainly located in inland areas, brought about a convergence of the growth pattern across provinces in the 1980s. The subsequent divergence in the provincial growth rates between the coast and the interior generated an enlarging regional disparity in China in the 1990s. The ever-faster growth in the coastal region was benefited by China’s openness and the development of non-state-owned enterprises. The development of non-state-owned enterprises underlies the higher operational efficiency in the coastal region. Additionally, with the insignificant regression results, fiscal decentralization was observed to facilitate faster growth in the coast region. The findings justify the initiative of the "West Region Development Strategy" and offer some policy implications for China.

If not here, then perhaps not anywhere: urban growth management as a tool for sustainability planning in British Columbia's capital regional district

In 1995 the provincial government of British Columbia, Canada, passed new legislation encouraging regional districts to prepare Regional Growth Strategies. The strategies were to be means of coordinating municipal action on regional issues. They were also meant to facilitate pursuit of sustainability objectives, including reducing urban sprawl, protecting environmentally sensitive areas, providing affordable housing and decreasing pollution. This paper examines the experience so far in one region that chose to prepare a growth strategy: the Capital Regional District (CRD) at the south end of Vancouver Island. Growth‐management planning in the CRD has been and remains both critical and difficult. The region expects a substantial population increase over the next couple of decades and has a limited land base for urban expansion. Many citizens recognise that their quality of life is high, but vulnerable and, as a result, public support for effective growth management is stronger in the CRD than in many other provincial growth areas. However, BC does not have a tradition of strong regional governance and the CRD as a regional authority is the creature of sixteen municipalities and electoral areas. Seven years into the process, effective growth management still faces substantial challenges, including the persistent jurisdictional protectionism of CRD municipalities. Nevertheless, there have been positive achievements and an admirable diversity of individuals, organisations and initiatives continue to push municipal and regional officials towards a more sustainable future.

What Effect does the Size of the State-Owned Sector Have on Regional Growth in China?

This paper tests the contributions of the size of state-owned enterprises as a determinant of China's economic growth. The methodology is discussed in papers by Levine and Renelt (1992) and Sala-i-Martin (1997). We estimate regressions with growth of output and total factor productivity as the dependent variable and a variety of other factors, including measures of the size of the state-run sector, as regressors. We find that controlling for a variety of other factors, the greater the importance of state owned enterprises, as measured by the proportion of total industrial production they produce, the lower the provincial growth rate. The average estimate is that a decrease in the SOE share of industrial production by ten percentage points increases real GDP growth the following year by 1.14%. The average impacts of a reduction in the SOE share in employment are smaller in absolute magnitude and different for large provinces than they are for small ones. Large provinces actually have higher growth rates if this share rises, while smaller provinces have higher growth rates when it falls.

Human Capital, Urbanization and Canadian Provincial Growth

COULOMBE S. (2003) Human capital, urbanization and Canadian provincial growth, Reg. Studies 37 , 239-250. This paper investigates the conditional convergence of both human capital indicators and nominal per capita income across Canadian provinces in a panel-data empirical framework. Long-run relative provincial steady states are determined by relative rates of urbanization, one-time shocks to Quebec's and Alberta's relative steady states, and a Nova Scotia fixed effect. Indicators of relative human capital ratios appear to have converged following a pattern that is common and similar to per capita income but with two notable exceptions. First, in Alberta, the 1973 oil shock contributed to the rise in per capita income but its effect on human capital is significant only for females. Second, human capital appears to remain concentrated in the relatively poor province of Nova Scotia. Two notable findings come out of the analysis. First, nominal income disparities at the provincial level appear to be real, not just nominal. Second, the analysis suggests that, at the regional level, human capital is a necessary but not sufficient condition for being wealthier in the long run. COULOMBE S. (2003) Le capital humain, l'urbanisation et la croissance provinciale au Canada, Reg. Studies 37 , 239-250. A partir des données provenant des enquê tes empiriques par panel, cet article cherche à examiner la convergence conditionnelle et des indicateurs du capital humain, et du revenu par tête nominal à travers les provinces du Canada. Des états stationnaires provinciaux relatifs et à long terme sont déterminés à partir des taux d'urbanisation relatifs, des chocs ponctuels aux états stationnaires pour le Québec et l'Alberta, et d'un effet fixe dans la Nouvelle-Ecosse. Il semble que des indicateurs des rapports relatifs du capital humain ont convergé par suite d'une tendance commune et similaire à celle du revenu par tête, à deux exceptions importantes près. Primo, en Alberta, le choc pétrolier de 1973 a contribué à la montée du revenu par tête, bien que son effet sur le capital humain ne soit marqué que pour les femmes. Secundo, le capital humain semble se concentrer sur la province relativement pauvre qui est la Nouvelle-Ecosse. Il en résulte de cette analyse deux constats majeurs. Dans un premier temps, les écarts des revenus nominaux semblent être non seulement nominaux mais aussi réels au niveau provincial. Dans un deuxième temps, l'analyse laisse supposer que, sur le plan régional, le capital humain s'avère à long terme une condition préalable mais non pas suffisante de la richesse. COULOMBE S. (2003) Menschenkapital, Verstä dterung und Wachstum in kanadischen Provinzen, Reg. Studies 37 , 239-250. Dieser Aufsatz untersucht die bedingte Konvergenz von Indikatoren von Menschenkapital und nominalem per-Kopf Einkommen in Provinzen in ganz Kanada im Rahmen einer empirischen Datenliste. Lang anhaltende, sich relativ im Gleichschritt bewegende Zustände in Provinzen werden durch relative Raten der Verstädterung bestimmt, die seinerzeit wie Schock auf die relativ gleichmäßig anhaltenden Zustände in Alberta und Quebec gewirkt hatten, und durch einen Dauerzustand in Nova Scotia. Indikatoren relativer Menschenkapitalraten scheinen sich an einander angenähert zu haben, wobei sie einem Muster folgen, das weit verbreitet und dem pro-Kopf Einkommen ähnlich ist, doch nicht ohne zwei beachtenswerte Ausnahmen. Die erste betrifft Alberta, wo der Ölschock 1973 zu einen Anstieg in pro-Kopf Einkommen beitrug, doch seine Wirkung aufs Menschenkapital nur bei Frauen als signifikant bezeichnet werden kann. Zweitens scheint die Konzentration von Menschenkapital in der relativ armen Provinz Nova Scotia weiter anzuhalten. Es ergeben sich zwei bemerkenswerte Befunde aus der Analyse: nominale Einkommensungleichheiten scheinen nicht nur nominal auf Provinzebene zu sein, sie sind es auch in Realität, uns zweitens deutet die Analyse darauf hin, daß auf regionaler Ebene Menschenkapital eine notwendige, doch auf lange Sicht nicht ausreichende Bedingung für größeren Wohlstand ist.

The relative contributions of location and preferential policies in China's regional development: being in the right place and having the right incentives

A large part of the literature on provincial inequality in China has found it necessary to include regional dummies in the provincial growth regressions. A smaller but vocal part of the literature has emphasised the granting of preferential policies to explain the faster growth of the coastal provinces. We replace the regional dummies with a measure of the ability to participate in international trade ( Geography), and a preferential policy index ( Policy). We find that geography and policy had about equal influence on coastal growth (3 percentage points each). Geography affected growth with a much longer lag than policy, however. The policy index was highest for the metropolises (Beijing, Shanghai, and Tianjin) and lowest for the central and northwestern provinces. The preferential policies are to a large extent “deregulation policies” that enabled marketization and internationalization of the coastal economies and allowed them to become more like their East Asian neighbours (and competitors). The weak (statistically insignificant) support for conditional convergence is in line with the existence of institutions that retard the income convergence process generated by the movement of labor and capital and by the Stolper–Samuelson mechanism. The household registration system ties the peasants to the land, the monopoly state bank system favors borrowing by state enterprises, and local protectionism reduces inter-provincial trade. Clearly, these institutions need to be deregulated. An effective strategy to develop the western provinces must therefore encompass physical capital formation, human capital formation, and institutional capital formation.

Geography, Economic Policy, and Regional Development in China

Many studies of regional disparity in China have focused on the preferential policies received by the coastal provinces. We decomposed the location dummies in provincial growth regressions to obtain estimates of the effects of geography and policy on provincial growth rates in 1996–99. Their respective contributions in percentage points were 2.5 and 3.5 for the province-level metropolises, 0.6 and 2.3 for the northeastern provinces, 2.8 and 2.8 for the coastal provinces, 2.0 and 1.6 for the central provinces, 0 and 1.6 for the northwestern provinces, and 0.1 and 1.8 for the southwestern provinces. Because the so-called preferential policies are largely deregulation policies that have allowed coastal Chinese provinces to integrate into the international economy, it is far superior to reduce regional disparity by extending these deregulation policies to the interior provinces than by re-regulating the coastal provinces. Two additional inhibitions to income convergence are the household registration system, which makes the movement of the rural poor to prosperous areas illegal, and the monopoly state bank system that, because of its bureaucratic nature, disburses most of its funds to its large traditional customers, few of whom are located in the western provinces. Improving infrastructure to overcome geographic barriers is fundamental to increasing western growth, but increasing human capital formation (education and medical care) is also crucial because only it can come up with new better ideas to solve centuries-old problems like unbalanced growth.

Geography, Economic Policy and Regional Development in China

Many studies of regional disparity in China have focused on the preferential policies received by the coastal provinces. We decomposed the location dummies in provincial growth regressions to obtain estimates of the effects of geography and policy on provincial growth rates in 1996?99. Their respective contributions in percentage points were 2.5 and 3.5 for the province-level metropolises, 0.6 and 2.3 for the northeastern provinces, 2.8 and 2.8 for the coastal provinces, 2.0 and 1.6 for the central provinces, 0 and 1.6 for the northwestern provinces, and 0.1 and 1.8 for the southwestern provinces. Because the so-called preferential policies are largely deregulation policies that have allowed coastal Chinese provinces to integrate into the international economy, it is far superior to reduce regional disparity by extending these deregulation policies to the interior provinces than by re-regulating the coastal provinces. Two additional inhibitions to income convergence are the household registration system, which makes the movement of the rural poor to prosperous areas illegal, and the monopoly state bank system that, because of its bureaucratic nature, disburses most of its funds to its large traditional customers, few of whom are located in the western provinces. Improving infrastructure to overcome geographic barriers is fundamental to increasing western growth, but increasing human capital formation (education and medical care) is also crucial because only it can come up with new better ideas to solve centuries-old problems like unbalanced growth.

Measuring Government Growth in the Canadian Provinces: Decomposing Real Growth and Deflator Effects

Notre these est a l’effet que pour mesurer correctement la croissance des depenses publiques, il faut distin-guer trois dimensions de la croissance : celle qui resulte d’une augmentation de l’activite gouvernementale,la croissance reelle, celle qui resulte des couts plus eleves dans le secteur public, l’effet prix, et enfin cellequi resulte de l’effet combine de la croissance reelle et de l’effet prix, la croissance nominale, qui corres-pond au changement dans le ratio des depenses gouvernementales sur le PIB. A l’aide de donnees sur lesdepenses des gouvernements provinciaux, nous montrons qu’il n’y a eu aucune croissance reelle du gouver-nement dans trois provinces de 1971 a 1995 et qu’il y a eu un effet prix substantiel dans la croissance desgouvernements provinciaux de toutes les provinces.In this paper, we argue that, when measuring government growth, we should distinguish among three growthphenomena: growth resulting from the broader scope of government activity, referred to as real growth;growth that results from higher costs of providing government goods and services, referred to as deflatoreffect; and growth in the simple ratio of government expenditure to gross domestic product (GDP), nominalgrowth, which is due to the combined impact of real growth and deflator effect. Using data on provincialgovernment spending, we show that, over the 1971-95 period, there has been no real growth in three provin-ces and that there has been a substantial deflator effect on provincial government growth in all ten provinces.

Small and medium enterprise theory: evidence for Chinese TVEs

The research analyses small and medium enterprises (SMEs), i.e. township and village enterprises (TVEs), operating in rural China over the last decade. It focuses on factors that affect the growth of TVEs run by Township and Village (TV), defined as collective, at provincial level. The paper examines SME theory and the role of human capital in the SMEs development. Following this, it analyses the development of Chinese TVEs and their role in the socio-economic development of rural areas and of the national economy. A panel analysis is then performed, using provincial panel data of collective TVEs over the period 1986–93, in order to capture the major determinants of provincial growth. The results of the panel estimations highlight some important features of TVEs run by TV sector, and provide empirical evidence in support to the positive role of clustering (measured through a new index) and human capital in the provincial growth of this sector. Copyright © 1999 John Wiley & Sons, Ltd.

The Labor-Marker Effects of Introducing National Health Insurance: Evidence From Canada

Although national health insurance (NHI) plans in the United States are often opposed on the basis of their potential disemployment effects, there is no existing evidence on the effects of NHI on employment. We provide such evidence by examining the employment consequences of NHI in Canada, using the fact that NHI was introduced on a staggered basis across Canadian provinces. We examine monthly data on employment, wages, and hours across 8 industries and 10 provinces over the 1961–1975 period. We find that employment rose after the introduction of NHI; wages increased as well, and average hours were unchanged. In addition, we find lower rates of employment and wage growth after introduction of NHI in provinces that financed NHI with general revenues rather than lump-sum premiums and lower rates of wage growth in provinces with high initial levels of private insurance coverage.

Ontario Municipal Policy Affecting Local Autonomy: A Case Study Involving Windsor and Toronto

Entre 1900 et les années 20, période de la première grande expansion urbaine ce sont les municipalités — seules ou d'un commun accord—qui encouragèrent des innovations politiques ainsi que de nouveaux services à leurs habitants. En général, les gouvernements provinciaux n'entrèrent pas beaucoup dans le champ de ces politiques nouvelles, mais ils ne freinèrent pas non plus les efforts issus d'un esprit d'autonomie locale. Ce n'est qu'en 1945, à la suite des crises économiques de la Dépression (et d'un esprit renouvelé de développement urbain) que l'autorité des gouvernements provinciaux sur les municipalités se manifesta. Notre étude examine deux crises qui menacèrent l'avenir du système municipal en Ontario. D'abord le cas de Windsor: aux années 30, Windsor et ses faubourgs furent menacés de banqueroute, ce qui risquait défaire péricliter le crédit provincial. Ensuite, aux années 50, l'impuissance de la ville de Toronto, face aux besoins de services qui dépassaient les limites strictes de la ville, risqua d'empêcher, sinon d'arrêter, le développement de ce centre de croissance provinciale. Notre étude montre comment le gouvernement provincial intervint à contre-cœur dans les affaires municipales, afin de créer pour les deux régions de nouveaux règlements, et comment il créa une structure de surveillance provinciale qui comprendrait une Commission des affaires municipales plus forte ainsi qu'un département spécifiquement conçu pour gérer les affaires municipales. Le but de cette politique fut de soutenir l'autonomie municipale, non pas de la restreindre.

Development planning in South Africa

Celebrated as a beacon of democracy and reconciliation, many people in South Africa continue to live in severe poverty, particularly in the Eastern Cape Province. Backed by the United Nations Development Programme, the Eastern Cape's provincial government consequently launched an historically ambitious program—the Provincial Growth and Development Plan—aimed at tackling the province's poverty, unemployment and inequality over a ten-year period in a radical policy overhaul. Drawing on the author’s first-hand engagement with the planning process, Development Planning in South Africa is an empirically rich study that utilizes a strategic-relational approach to explore the ways in which this unprecedented challenge was negotiated and eventually undermined by the South African state. The first work of its kind, the book provides an indispensable micro-level study with profound implications for how state power is understood to be organized and expressed in state policy. Relevant beyond South Africa to policy implementation in both developing and developed states globally, the book is essential reading for students and scholars of government studies, political economy, development, policy studies, and social movements.