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Abstract
This paper focuses on the issue of regional inequality in China. It seeks to move away from focusing on the relationship between factor accumulation and regional inequality towards an analytical framework that concentrates upon the ways in which regional inequality has articulated with factor productivity and firm dynamics, while acknowledging the role of institutional context. Based on one database on firm‐specific economic and financial variables, this paper measures factor productivity in China's manufacturing industry at the regional level, and decomposes it into various components. Empirical results confirm that regional inequality in terms of productivity have been declining in China. It also demonstrates that regional inequality has been fundamentally shaped by the regional institutional context, particularly in regard to the triple process of decentralization, globalization, and marketization, resulting in an enormous spatial variation of economic and institutional landscapes.
This research is supported by the National Science Foundation of China for Distinguished Young Scholars, No. 41425001; National Natural Science Foundation of China, No. 41271130. We would love to thank the editor and four reviewers for their insightful comments on an earlier version of this paper. Any remaining errors are the authors’.
This research is supported by the National Science Foundation of China for Distinguished Young Scholars, No. 41425001; National Natural Science Foundation of China, No. 41271130. We would love to thank the editor and four reviewers for their insightful comments on an earlier version of this paper. Any remaining errors are the authors’.
Notes
This research is supported by the National Science Foundation of China for Distinguished Young Scholars, No. 41425001; National Natural Science Foundation of China, No. 41271130. We would love to thank the editor and four reviewers for their insightful comments on an earlier version of this paper. Any remaining errors are the authors’.
1. This method has been widely used in recent studies (Hsieh and Klenow Citation2009; Brandt, Van Biesebroeck, and Zhang Citation2012; Yang and He, Citation2014). However, it is quite complicated; details thus have not been included here due to space limitation. Please see Yang and He for a detailed description of TFP calculation (2014).
2. We acknowledge that mergers and acquisitions (M&A) may compromise the effectiveness of our measure. However, based on China's Mergers & Acquisitions Yearbook, we found that this only has minor impact. For example, in 2006, there were 1,784 M&A cases (the largest number during 1998–2008) in China, while the number of firm exit and entry in 2006 were 20,400 and 47,616 respectively.
3. We do not pay much attention to cross share, because it is just a covariance‐type term.
4. A firm is considered as a state‐owned/HMT/foreign/private firm, if the share of state‐owned/HMT/foreign/private capital is the largest in the firm.
Additional information
Funding
Notes on contributors
Canfei He
Dr. Canfei he [[email protected]] is a professor, and Mr. Yi zhou [[email protected]] is a PHD candidate at the College of Urban and Environmental Science and Lincoln Center for Urban Development and Land Policy, Peking University, Peking, 100871.
Shengjun Zhu
Dr. Shengjun Zhu Department of Geography, College of Science, Swansea University, Singleton Park, Swansea, SA2 8PP, U.K.; [[email protected]].