Does economic growth affect urbanization? New evidence from China and the Chinese National Congress ¬リニ

Using a panel of Chinese provinces during 1985–2008, we propose an estimation strategy to study the within-province effect that per capita GDP growth may have on the urbanization rate. Our approach exploits the timing of the National Congress of the Communist Party, which is a 5-yearly meeting where national economic policies are debated. Because economic growth is a key policy objective and given that the Chinese fiscal system is highly decentralized, the recurring National Congress may encourage a systematic pattern of spending by provincial governments to foster growth. We find that per capita GDP growth is associated with the timing of the National Congress, and exploiting instrumental variables that convey this timing information, we also find that growth has a statistically significant effect on the urbanization rate. 2015 Elsevier Inc. All rights reserved. § We are grateful to Associate Editor James Vere and the anonymous referee for their generous comments and suggestions. * Corresponding author at: School of Economics, University of Adelaide, Adelaide, SA 5000, Australia. Tel.: +61 8 8303 4927; fax: +61 8 8223 1460. E-mail address: [email protected] (Nicholas C.S. Sim). 1 Song and Zenou (2012, p. 497) describe urban villages as habitats where ‘‘buildings are overcrowded; public stairways and pathways inside buildings are extremely narrow; public facilities are inadequate and poorly maintained; public roadways cannot meet the basic requirements of transportation and fire control standards; distances between buildings are well below standard and cannot meet fire control standards; and garbage is scattered and unhygienic’’.