Regional determinants of poverty alleviation through entrepreneurship in China

ABSTRACT

Based on the economic theory of dual structure, the authors of this study conducted an empirical analysis on the relationship between entrepreneurship and poverty alleviation using panel data collected in 31 provinces in China from 2000 to 2017. The study arrived at three conclusions. First, entrepreneurship in urban and rural areas can generally facilitate poverty alleviation. Second, the correlation between entrepreneurship and poverty alleviation in urban areas is significantly stronger than in rural areas. Moreover, the correlation is also significantly stronger in developed areas than in underdeveloped areas. Third, the level of financial development in an area can moderate the effect of entrepreneurship on poverty alleviation. These conclusions suggest that entrepreneurial activities in emerging economies have a stronger effect on alleviating poverty in urban regions instead of helping less developed or rural areas. The authors recommend that government agencies should institute policies aimed at vigorously improving the business environment in rural and underdeveloped areas. Particularly a strengthening of the financial system in these areas could further enhance the positive effect of entrepreneurship on poverty alleviation.

KEYWORDS:

• Entrepreneurship
• poverty alleviation
• dual structure
• regional financial development

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Developing countries were the object of study when the theory of dual economy was first brought forth. With their economic and social development, developing countries have split into different groups: countries like China, India and Brazil have achieved particularly prominent economic development and are thus called ‘emerging economies’. Nevertheless, as the dual structure is still prevalent in emerging economies, the theory of dual structure also applies to such countries.

2. It is specified in the report to the 19th National Congress that ‘some acute problems caused by unbalanced and inadequate development await solutions’, and that ‘there are still large disparities in development and income distribution between rural and urban areas’.

3. Source: Calculations based on data in the China Statistical Yearbook 2018.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China (71572208).