Growth and Regional Inequality in China During the Reform Era Derek

Chinese city-level data indicate that differences in growth rates are far more severe at this level than indicated in previous studies which typically use data at higher levels of aggregation. Using city-level data for 206 cities during 1989 to 1996, we estimate a variety of growth equations. A major finding is that while the policy of awarding a special economic zone status enhances growth (with annual growth rates up to 8.2 percentage points higher), other polices do not have obvious effects. Our findings predict that, without a change in policy, the disparity in levels of average incomes will increase as the Chinese economy continues to grow. More broadly, our results contribute to the literature on openness and growth, providing some evidence that more open economies grow faster JEL Classification Numbers:010, 040, 053