The determinants of national and provincial economic growth in China
This dissertation investigates the determinants of economic growth in China since 1978, with a focus on the determinants of spatial growth. A study of the theories of economic growth shows that both proximate and fundamental factors can contribute to economic growth. In the case of China, institutional changes are the keys to the Chinese transitional economy. Given the special nature of China's economy, the main institutional reforms since 1978 are examined, together with the gradual transition process. Furthermore, from the overview of empirical literature, it is found that the proximate determinants such as initial gross domestic product (GDP), investment, population growth, human capital and openness are determinants of economic growth in China based on the findings in cross-country growth literature. From growth accounting exercises, capital formation and total factor productivity (TFP) growth can be seen to play important roles in the rapid economic growth in China. However, while the nationwide economic growth is impressive, the pace of reform and economic development has been uneven across provinces. In the existing literature, geography and preferential policy are emphasised as particular factors that affect coastal-interior disparity. This study incorporates the economic variables identified as important stimulants to growth, drawing on major findings in the study of convergence and economic growth to estimate the determinants of regional economic growth in China. To address the weaknesses of using ordinary least squares (OLS) for cross-country regression analyses, fixed-effects ordinary least squares (OLS) and random-effects generalised least squares (GLS) panel data estimators are applied to provincial data from 1994 to 2003. It is concluded that the convergence hypothesis does not hold in China, and that export, investment, education, foreign direct investment (FDI) growth and coastal dummy have a positive effect on regional GDP per capita growth in China while population growth affects the annual growth rate negatively.