A Spatial Econometric Modeling of Chinese Economic Growth

This study reconsiders China's recent growth experience from a spatial econometric perspective.Based on the neoclassical production function of growth,a stochastic growth model incorporating an institutional variable is specified and estimated using cross-province socio-economic data in 1985—2005.Of the three explanatory variables,only the growth of capital stock is proved to be the main source of Chinese provincial output growth,while for the variables of labor and institutions,their estimates are not statistically significant.In other words,the growth of labor and the progress of marketization does not necessarily lead to a higher rate of output growth.On the other hand,the incorporated spatial lag turns out to be positive and highly significant.This implies that while provinces are converging or diverging in their growth rates,they tend to display similar performance in contiguity.These results are different from those of conventional Chinese regional development studies.They are important in that they represent the first detailed evidence on the role of spatial effects in a Chinese regional economic study.