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on China |
| By: | Yongbok Jeon |
| Abstract: | The aim of this study is to empirically test the validity of the Kaldorian approach to growth and development in China during its reform period of 1979-2004. In order to obtain robust results, both time-series and regional panel data formats are used. The present study finds from both data sets that the Kaldorian hypotheses about economic growth are valid in China during the reform period. |
| Keywords: | Economic growth in China, Kaldor’s Laws, increasing returns to scale, manufacturing industry |
| JEL: | O11 O14 O53 E12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2006_08&r=cna |
| By: | Lindbeck, Assar (Research Institute of Industrial Economics) |
| Abstract: | I discuss the nature of the economic reforms in China during the last quarter of a century in the context of a typology of economic systems, emphasizing the interaction between economic and social mechanisms. I also consider China’s options for further reforms. I focus on economic reforms that make the growth path less resource demanding and social reforms that enhance income security and improve education and health care for disadvantaged population groups. |
| Keywords: | China; Transition Economies; Social Insurance; Human Services |
| JEL: | I18 I19 I38 O53 P30 |
| Date: | 2006–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0680&r=cna |
| By: | Lindbeck, Assar (Research Institute of Industrial Economics) |
| Abstract: | This paper applies a systems-oriented, “holistic” approach to China’s radical economic reforms during the last quarter of a century. It characterizes China’s economic reforms in terms of a multidimensional classification of economic systems. When looking at the economic consequences of China’s change of economic system, I deal with both the impressive growth performance and its economic costs. I also study the consequences of the economic reforms for the previous social arrangements in the country, which were tied to individual work units: agriculture communes, collective firms and state-owned enterprises. I continue with the social development during the reform period, reflecting a complex mix of social advances, mainly in terms of poverty reduction, and regress for large population groups in terms of income security and human services, such as education and, in particular, health care. Next, I discuss Chinas future policy options in the social field, whereby I draw heavily on relevant experiences in developed countries over the years. The future options are classified into three broad categories: policies influencing the level and distribution of factor income, income transfers including social insurance, and the provision of human services. |
| Keywords: | China; Transition Economies; Social Insurance; Human Services |
| JEL: | I18 I19 I38 O53 P30 |
| Date: | 2006–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0681&r=cna |
| By: | Maurice Obstfeld (University of California, Berkeley) |
| Abstract: | In the face of huge balance of payments surpluses and internal inflationary pressures, China has been in a classic conflict between internal and external balance under its dollar currency peg. Over the longer term, China's large, modernizing, and diverse economy will need exchange rate flexibility and, eventually, convertibility with open capital markets. A feasible and attractive exit strategy from the essentially fixed RMB exchange rate would be a two-stage approach, consistent with the steps already taken since July 2005, but going beyond them. First, establish a limited trading band for the RMB relative to a basket of major trading partner currencies. Set the band so that it allows some initial revaluation of the RMB against the dollar, manage the basket rate within the band if necessary, and widen the band over time as domestic foreign exchange markets develop. Second, put on hold ad hoc measures of financial account liberalization. They will be less helpful for relieving exchange rate pressures once the RMB/basket rate is allowed to move flexibly within a band, and they are best postponed until domestic foreign exchange markets develop further, the exchange rate is fully flexible, and the domestic financial system has been strengthened and placed on a market-oriented basis. |
| Keywords: | Renminbi, China currency, China balance of payments, fixed exchange rate exit strategy, |
| Date: | 2006–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ciders:1066&r=cna |
| By: | Shah, Anwar; Shen, Chunli |
| Abstract: | In China, most of the service delivery responsibilities are assigned to the subnational governments. Yet for reasons of efficiency in tax collection and administration, the central government collects revenues far in excess of its expenditure needs. In 2003 the central government collected 70 percent of consolidated revenues but accounted for only 30 percent of consolidated expenditures. The initial fiscal surplus of the central government enables it to use its spending power to provide financing to subnational jurisdictions for the achievement of national objectives and to influence local priorities. This paper examines the incentives associated with the design of such transfers and their implications for the efficiency and equity of public service provision and accountable local governance in China. The paper argues that the existing design of such transfers is not consistent with efficiency and equity considerations. It further undermines local autonomy without enhancing local accountability while creating incentives for imprudent fiscal management. Its main limitations include a complex and opaque system, a piecemeal approach to gap filling, lack of consistency of design with objectives, focus on input controls without regard for output accountability, incentives to support an antiquated management paradigm, a one-size-fits-all approach to local financing, and lack of transparency and regulatory framework for the intergovernmental transfer system. The paper makes specific suggestions on a reform of this system to overcome these limitations and on better use of fiscal transfers to create responsive, responsible, equitable, and accountable local governance in China. |
| Keywords: | Intergovernmental Fiscal Relations and Local Finance Management,Regional Governance,Public & Municipal Finance,Urban Economics,Public Sector Management and Reform |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4100&r=cna |
| By: | Claustre Bajona (Economics University of Miami); David Kelly |
| Abstract: | Countries that wish to erect trade barriers have a variety of instruments at their disposal. In addition to tariffs and quotas, countries can offer tax relief, low interest financing, reduced regulation ,and other subsidies to domestic industries facing foreign competition. In a trade agreement, countries typically agree to reduce not only tariffs, but also subsidies. We consider the effect of a trade agreement on pollution emissions. We show that while reducing tariffs may indeed increase pollution intensive production in a country, reductions in some subsidies required by the trade agreement reduce pollution in general equilibrium for reasonable parameter values. The reduction results from two effects. First, a reduction in subsidies to firms reduces pollution-causing capital accumulation. Second, if subsidized firms, industries, and/or state owned enterprises are sufficiently more pollution intensive, then reducing subsidies moves capital and labor from more to less pollution intensive firms. We calibrate the model to the case of China and show that pollution emissions after China's accession to the WTO are up to 22.9 percent lower than a baseline in which China does not enter the WTO, without any pollution abatement policy changes or environmental side agreements. |
| Keywords: | trade agreements, domestic subsidies, pollution emissions, dynamic general equilibrium |
| JEL: | F18 F41 Q56 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:306&r=cna |
| By: | Soohyung Lee |
| Abstract: | The main questions of this paper are as follows: Whether and to what extent does rising educational attainment contribute to a country's economic growth by facilitating the reallocation of labor from the agricultural sector to the non-agricultural sector? The transition from the agricultural sector to the non-agricultural sector ("transition" hereinafter) is an important aspect of a country's development. Consider China as an example. In China, around 70% of the labor force worked in the agricultural sector in 1980, whereas only 47% remained in the agricultural sector in 2000. Over the same period of time, China's gross domestic product (GDP) per capita increased from U.S. $173 to $856. In addition, cross-country data demonstrate that developed countries have a lower share of employment in agriculture than less-developed countries. For instance, high income countries had 4% of their employees engaged in the agricultural sector in 2000, whereas middle income countries had 40% of their employees working in the agricultural sector. In low income countries, the share may be even larger: in Bangladesh, for example, more than 60% of employees work in the agricultural sector. Based on these empirical observations, using calibration exercises a number of papers have demonstrated the possibility that income differences across countries can be explained by different onsets of transition (Gollin et al. 2002, 2004, Parente et al. 2000, Restuccia et al. 2003). In contrast, there is little empirical research based on micro-level data studying the factors that affect the speed of transition. As far as I am aware, the most closely related empirical study of transition was carried out by Jeong and Kim (2005) using data for Thailand. However, the authors focused more on replicating gradual transition than on determinants governing the speed of transition. They relied on the assumption of “sector specific complementarity between work-experience and labor†to explain the slow transition, but did not provide direct empirical evidence for this assumption. In contrast to existing research, this paper tries to shed light on one hypothesized factor affecting the speed of transition: raising educational attainment may facilitate the labor force moving from the agricultural sector to the non-agricultural sector. I use a Chinese household panel dataset--the China Health and Nutrition Survey (CHNS)--to measure the extent to which educational attainment raises the probability of a worker obtaining a non-agricultural job. To extract the causal effect of education, I use the increase in the number of secondary schools during the Cultural Revolution (CR) in China (1966 to 1976) as an instrumental variable. Reducing the differences between the peasantry and the rest of the population was identified as being a major goal of the CR; as a result of this ideology, the policies of this period promoted mass education among underserved groups, including rural populations especially in terms of the secondary schooling (Hannum 1999). My preliminary results suggest that one more secondary school per 10,000 people in a province is correlated with an increase in 1.15 years of schooling. Using a Probit model with this instrumental variable, I estimate that one more year of schooling raises the probability a worker will obtain a non-agricultural job by 4.53%. However, what does this estimation imply for transition and aggregate economic growth? In China, the share employed in agriculture has decreased from 68.1% in 1982 to 50% in 2000 (Chinese Statistical Yearbook, 2003). On the other hand, the average years of schooling of workers in China has increased from 5.83 years to 7.66 years (Chinese Population Census 1982, 2000). Hence, this increase in schooling, 1.84 years, may have contributed 8.34% points to the decrease in the agricultural share of employment from 1982 to 2000. In terms of the real GDP growth, accurate growth accounting requires further study. However, a back-of-the-envelope calculation suggests that the decrease in the agricultural employment share due to rising educational attainment implies an increase of 0.65% points of the real GDP per worker growth per annum. Although the growth and level accounting remains to be done, I believe that this paper can contribute to the economic growth literature by testing whether and to what extent education causes growth. Within this research literature, many papers have suggested the possibility of a causal effect of education on growth, but a recent study by Bils and Klenow (2000) questions this causal relationship. For example, if we include the role of education in sectoral reallocation (0.65% point), the contribution of education to the annual growth rate of the real GDP per worker increases from about 20% to 32%. Therefore, we can conclude that education causes growth (at least 12%) and that its contribution to growth is significant |
| Keywords: | Education; Sectoral Shift; Transition; China |
| JEL: | O1 O5 I2 J6 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:814&r=cna |
| By: | Maasoumi, Esfandiar (SMU); Wang, Le (SMU) |
| Abstract: | In this paper, we propose a new concept of convergence which is based on the metric entropy measure recently proposed by Granger et al. (2004) to investigate economic convergence in China. This entropy measure compares whole distributions of growth rates across individual provinces. Separately, based on this same entropy measure, we also implement cluster analysis to identify any convergence clubs. Our four main conclusions are: (1) while we certainly reject the null hypothesis that there exists a nation-wide convergence, we do ?nd that there exist convergence clubs for both the pre- and post-reform periods, (2) we ?nd a number of very small convergence clubs. In particular, there are seven and ?ve convergence clubs for the pre- and post-reform periods, respectively. (3) in comparing the number and size of convergence clubs for both the pre- and post-reform periods, it could be argued that the extent of convergence is more prevalent during the post-reform period than during the pre-reform period, (4) convergence groups cannot be characterized by such unique features as region or the extent of policy preference level that are com- monly used in the literature. |
| Keywords: | convergence, growth, entropy, China, cluster analysis |
| JEL: | F18 Q4 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:0602&r=cna |
| By: | Chen, Shaohua; Mu, Ren; Ravallion, Martin |
| Abstract: | The paper revisits the site of a large, World Bank-financed, rural development program in China 10 years after it began and four years after disbursements ended. The program emphasized community participation in multi-sectoral interventions (including farming, animal husbandry, infrastructure and social services). Data were collected on 2,000 households in project and nonproject areas, spanning 10 years. A double-difference estimator of the program ' s impact (on top of pre-existing governmental programs) reveals sizeable short-term income gains that were mostly saved. Only modest gains to mean consumption emerged in the longer term-in rough accord with the gain to permanent income. Certain types of households gained more than others. The educated poor were under-covered by the community-based selection process-greatly reducing overall impact. The main results are robust to corrections for various sources of selection bias, including village targeting and interference due to spillover effects generated by the response of local governments to the external aid. |
| Keywords: | Rural Poverty Reduction,Poverty Monitoring & Analysis,Economic Theory & Research,Poverty Impact Evaluation,Social Accountability |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4084&r=cna |
| By: | Mauricio Mesquita Moreira |
| Abstract: | El surgimiento de China origina cuestiones puntuales sobre el futuro de la industria de la manufactura en América Latina. Este documento analiza este desafío y sus implicancias. Comienza planteando la pregunta sobre si todavía es importante la industria de la manufactura para América Latina. Se cuestiona que la región no puede arriesgarse a dar la espalda a un camino de desarrollo absolutamente probado. Después continúa demostrando que la conjunción de los subsidios, la escala de productividad y el rol del gobierno hacen de China un competidor formidable. La importancia de este desafío se confirma a través del análisis de datos de comercio que sugieren un impacto sobre América Latina todavía bajo, pero al mismo tiempo representan una tendencia inquietante. |
| Keywords: | Access to markets, Trade, Exports, Industrial Sector, Latin America |
| JEL: | F13 F16 |
| URL: | http://d.repec.org/n?u=RePEc:idb:intalp:101&r=cna |
| By: | Chunbo Ma (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); David I. Stern (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA) |
| Abstract: | China experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000, but since then rate of decline slowed and energy intensity actually increased in 2003. Most previous studies found that most of the decline was due to technological change, but disagreed on the role of structural change. To the best of our knowledge, no decomposition study has investigated the role of inter-fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000. In this paper, we use logarithmic mean Divisia index (LMDI) techniques to decompose changes in energy intensity in the period 1980-2003. We find that: (1) technological change is confirmed as the dominant contributor to the decline in energy intensity; (2) structural change at the industry and sector (sub-industry) level actually increased energy intensity over the period of 1980-2003, although the structural change at the industry level was very different in the 1980s and in the post 1990 period; (3) structural change involving shifts of production between sub-sectors, however, decreased overall energy intensity; (4) the increase in energy intensity since 2000 is explained by negative technological progress; (5) inter-fuel substitution is found to contribute little to the changes in energy intensity. |
| JEL: | Q43 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:0615&r=cna |
| By: | Doner, Richard F.; Noble, Gregory W.; Ravenhill, John |
| Abstract: | Rationalization and stabilization following the Asian financial crisis of the late 1990s combined with the expansion and liberalization of regional and global trade to create significant parts industries in China, Indonesia, and the Republic of Korea. Conventional policies of stabilization and liberalization, however, cannot fully explain growth patterns. Japan and Korea grew into major players before liberalizing trade and investment, while even after extensive liberalization Indonesia has yet to move from extensive to intensive growth. These anomalies suggest that to explain success in the auto parts industry we need to move beyond liberalization to look at policies and institutions promoting economies of scale, skill formation, quality upgrading, supplier-linkage cooperation, and innovation. In Japan, the regional and global leader, innovative assemblers led industrial development and supported key suppliers, but the government also supported diffusion of quality control techniques and new technology to small and medium enterprises, and encouraged stable employment among core employees. Korea remains weaker on both small and medium enterprise and employment fronts, but government-encouraged consolidation around a small number of business groups, an extended period of protection, and support for export promotion led to economies of scale. Liberalization of foreign investment after the financial crisis helped ameliorate the excessive statism of earlier policies and strengthened the parts industry. In China, liberalization for WTO entry, rapid expansion in demand, and strong support by local governments encouraged a wave of foreign investment in both assembly and parts. In contrast, institutional weaknesses continue to constrain development opportunities in Indonesia. |
| Keywords: | Technology Industry,Economic Theory & Research,Water and Industry,Markets and Market Access,Non Bank Financial Institutions |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4106&r=cna |