The Convergence Analysis of Regional Growth Differences in China: The Perspective of the Quality of Economic Growth*

Abstract

This paper develops a biennial Malmquist-Luenberger productivity index, in which it takes resources and the environment into account, and use a spatial econometric analysis to measure the Chinese provincial spatial convergence of the total factor productivity ( TFP ) to conclude its decomposition. The empirical results show that: 1) China’s TFP increase significantly in recent years, mainly driven by technical improvement; 2) there is nationwide conditional convergence of productivity except for diffusion in the northeast and east regions. Because of the large spatial differences amongst various areas in China, the convergence of different region is affected by different factors; 3) we expect that “resource curse” would present in the regions in China excluding east regions. “Pollution haven” exists in the Central and western areas, suggesting that the perspective of China’s industrial environment is not optimistic; 4) the current ownership structure does not facilitate TFP growth, and industrial structure of inland areas limits local TFP growth. In general, if policy makers intend to converge the development gap between regions, assisting the developing areas to catch up with the relatively developed regions, it is crucial to improve the system of state-owned enterprise and the industrial structure, and government also needs to evaluate and test the effect of FDI rationally.