Globalization and regional inequality



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ECONOMICS

GLOBALIZATION AND REGIONAL INEQUALITY

IN CHINA


by

Tsun Se Cheong
and
Yanrui Wu
Business School

University of Western Australia

DISCUSSION PAPER 13.10
  1. Globalization and Regional Inequality in China


Tsun Se Cheong and Yanrui Wu
Business School, University of Western Australia, Australia

Email: Tsun.Cheong@uwa.edu.au (T. S. Cheong), Yanrui.Wu@uwa.edu.au (Y. Wu).



DISCUSSION PAPER 13.10

Abstract: This paper examines the impacts of globalization on intra-provincial inequality in China. The empirical analysis is based on a dataset of Chinese counties and county-level cities. It is found that foreign direct investment (FDI) and intra-provincial regional inequality are negatively correlated, whereas the relationship between international trade and regional inequality is statistically insignificant. In addition, it is shown that the level of industrialization and service development in Chinese provinces has a positive effect on intra-provincial inequality. It implies that intra-provincial regional inequality will increase as the primary sector declines. The results also show that domestic trade is negatively correlated with regional inequality, whereas the transportation infrastructure has a positive effect on inequality in the country.
Keywords: China, county-level, inequality, globalization, industrialization

JEL codes: D63, F19, F21, F69, O14, O53




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