Clustering, growth and inequality in China

Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyl

Abstract

This study examines the effects of China's industrial clusters on regional economic growth and urban-rural income inequality within a region. A density-based index (DBI) is developed to capture the unique features of cluster development in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that clusters enhance local economic growth substantially. Moreover, the existence of entrepreneurial clusters (clusters mainly consist of non-state-owned firms) helps to reduce local urban-rural income inequality by increasing the income of local rural residents. We also find that the clustering effects on growth and reduction of inequality are less significant in more urbanized regions or megacities. Identification issues are carefully addressed by deploying two-stage estimations with instrumental variables and Granger test.

Citation

Guo, D., Jiang, K., Xu, C., & Yang, X. (2020). Clustering, growth and inequality in China. Journal of Economic Geography, 20(5), 1207–1239. https://doi.org/10.1093/jeg/lbz038

• Journal Article Type: Article
• Acceptance Date: Dec 18, 2019
• Online Publication Date: Jan 17, 2020
• Publication Date: 2020-09
• Deposit Date: Nov 4, 2019
• Publicly Available Date: Jan 18, 2022
• Journal: Journal of Economic Geography
• Print ISSN: 1468-2702
• Electronic ISSN: 1468-2710
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 20
• Issue: 5
• Pages: 1207–1239
• DOI: https://doi.org/10.1093/jeg/lbz038
• Keywords: China; Clustering; Geography; Growth and inequality; Institutions
• Public URL: https://nottingham-repository.worktribe.com/output/3051132
• Publisher URL: https://academic.oup.com/joeg/advance-article/doi/10.1093/jeg/lbz038/5709143
• Additional Information: This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of Economic Geography following peer review. The version of record Di Guo, Kun Jiang, Chenggang Xu, Xiyi Yang, Clustering, growth and inequality in China, Journal of Economic Geography, , lbz038 is available online at: https://doi.org/10.1093/jeg/lbz038.
• Contract Date: Nov 4, 2019