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Inequality and Growth in Modern China$
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Guanghua Wan

Print publication date: 2008

Print ISBN-13: 9780199535194

Published to Oxford Scholarship Online: May 2008

DOI: 10.1093/acprof:oso/9780199535194.001.0001

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Forces Shaping China's Interprovincial Inequality

Forces Shaping China's Interprovincial Inequality

(p.79) 5 Forces Shaping China's Interprovincial Inequality
Inequality and Growth in Modern China

Kai‐yuen Tsui

Oxford University Press

This chapter explores the forces that shaped China's interprovincial inequality in the last five decades of communist rule. It proposes a framework under which a change in total inequality can be expressed as a sum of changes in spatial variations in the growth of total factor productivity (TFP) and in factor inputs. Applying this technique to China, it is found that the increase in regional inequality from the mid-1960s to the mid-1970s is mainly due to the contribution of TFP overwhelming that of physical capital. The opposite is true for the 1980s. The increase in the 1990s is mainly driven by the skewed distribution of investment in favour of the richer coastal provinces reinforced by the increasing contribution of TFP.

Keywords:   total factor productivity, inequality decomposition, factor inputs, coastal provinces

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