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ID:
079935
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| Publication |
2007.
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| Summary/Abstract |
Financial sector development may contribute to economic growth by facilitating capital accumulation and by improving productivity. This article investigates empirically the contribution that financial development may make to these two alternative drivers of economic growth in China using annual data for the period 1952 to 2005. Using cointegration and Granger-causality testing we examine the relationship between financial development and, respectively, capital accumulation and productivity in a time-series vector autoregression (VAR) framework. The substantive findings are that there is either bi-directional Granger causality between financial development and capital accumulation or that Granger causality runs from capital accumulation to financial development, depending on how capital accumulation and financial development are measured. The link between financial development and productivity is found to be statistically weak
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| 2 |
ID:
079936
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| Publication |
2007.
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| Summary/Abstract |
The question of whether fiscal decentralization has affected economic growth since the 1994 fiscal reform in China is interesting to both policy makers and economists. Using a simple model of endogenous growth that incorporates spending by different levels of government, and a panel data set for 30 provinces for the period of 1994-2002, this paper finds that fiscal decentralization contributes significantly to economic growth. This finding is consistent with the theoretical prediction that fiscal decentralization can increase economic efficiency. In addition, this paper attempts to investigate how the relationship between fiscal decentralization and provincial growth differs in the different regions considered. For this purpose, the 30 Chinese provinces and regions are categorized into three conventional economic belts that comprise the eastern, central, and western areas. This study finds that the effects of fiscal decentralization on economic growth vary among these three regions.
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| 3 |
ID:
079937
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| Publication |
2007.
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| Summary/Abstract |
In this paper we re-examine the regional determinants of FDI in China using both total FDI flows, and FDI flows disaggregated by entry mode. Building on both the FDI location and entry mode choice literatures, we argue for the existence of mode-specific location advantages, and test for their existence. We first specify and estimate a location model of aggregate FDI flows to Chinese regions. Using the aggregate model as a benchmark, we then estimate separate equations for each of three different entry modes (wholly-owned subsidiaries, equity joint ventures and cooperative joint ventures), and compare the results with the aggregate model. The results indicate that mode-specific location advantages do exist, at least within China, but they are limited to a small number of factors. In particular, we identify the accumulated stock of FDI as being more likely to attract high control modes of entry, while existing policies to attract FDI are more likely to attract lower control modes of entry.
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