The Cointegrating Relationship of Regional Growth in China
Humanities and Social Sciences
Volume 3, Issue 5, September 2015, Pages: 249-255
Received: Nov. 26, 2015; Published: Nov. 26, 2015
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Chun-Hung A. Lin, Department of Industrial Economics, Tamkang University, New Taipei City, Taiwan
Chia-Ming Li, Division of Marketing, Delta Electronics, Inc., Taipei, Taiwan
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Since the open door policy declared in the late 1970s, the economic growth of China has been rapidly developed and accumulated. However, the widening regional economic development disparity has been brought to the concern by the government. It is doubtful that the regional economic growth would tend to be equivalent by spillover effects from some more-developed regions to other less-developed ones. The goal of this paper is to examine the long-run relationship of Chinese provincial economic performance with the consideration of the characteristic of cross-sectional dependence in the panel data covering 30 provinces in China over the period 1990-2012. We find a strong spatial dependence over in China’s regional production function. After a cointegrating relation is confirmed using the methodology of Kao (1999) and Pedroni (1999), a spatial error correction model is further applied. We find the local cointegration term is significantly negative, suggesting a long-run convergence relation for the Chinese regional economic growth.
Regional Cointegration, Spatial Error Correction Model, Regional Covergence
To cite this article
Chun-Hung A. Lin, Chia-Ming Li, The Cointegrating Relationship of Regional Growth in China, Humanities and Social Sciences. Vol. 3, No. 5, 2015, pp. 249-255. doi: 10.11648/j.hss.20150305.23
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