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Clustering, growth and inequality in China
[Reversal of fortune: geography and institutions in the making of the modem world income distribution]

Author

Listed:
  • Di Guo
  • Kun Jiang
  • Chenggang Xu
  • Xiyi Yang

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- and county-level datasets, we find that clusters enhance local economic growth substantially. Moreover, the existence of entrepreneurial clusters (clusters mainly consist of nonstate-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.

Suggested Citation

  • Di Guo & Kun Jiang & Chenggang Xu & Xiyi Yang, 2020. "Clustering, growth and inequality in China [Reversal of fortune: geography and institutions in the making of the modem world income distribution]," Journal of Economic Geography, Oxford University Press, vol. 20(5), pages 1207-1239.
    • Handle: RePEc:oup:jecgeo:v:20:y:2020:i:5:p:1207-1239.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbz038
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    Citations

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    Cited by:

    1. Huaxi Yuan & Longhui Zou & Xiangyong Luo & Yidai Feng, 2022. "How Does Manufacturing Agglomeration Affect Green Development? A Spatial and Nonlinear Perspective," IJERPH, MDPI, vol. 19(16), pages 1-23, August.
    2. Jiangteng Zhou, 2023. "The impacts of highways on firm size distribution: Evidence from China," Growth and Change, Wiley Blackwell, vol. 54(2), pages 482-506, June.
    3. Xie, Dongshui & Bai, Caiquan & Zhang, Yuwei, 2023. "Relation-based governance, financial crisis shock, and economic growth in China," Economic Modelling, Elsevier, vol. 129(C).
    4. Hao, Yunping & Zhang, Bing, 2024. "The impact of digital financial usage on resident’s income inequality in China: An empirical analysis based on CHFS data," Journal of Asian Economics, Elsevier, vol. 91(C).
    5. Venera Timiryanova & Dina Krasnoselskaya & Irina Lakman & Denis Popov, 2021. "Inter- and Intra-Regional Disparities in Russia: Factors of Uneven Economic Growth," Sustainability, MDPI, vol. 13(24), pages 1-31, December.
    6. Meseret Chanieabate & Hai He & Chuyue Guo & Betelhem Abrahamgeremew & Yuanji Huang, 2023. "Examining the Relationship between Transportation Infrastructure, Urbanization Level and Rural-Urban Income Gap in China," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    7. Kun Jiang & Susheng Wang, 2024. "Survival tactics for distressed firms in emerging markets," Asia Pacific Journal of Management, Springer, vol. 41(2), pages 823-866, June.
    8. Zesen Qian & Lingran Yuan & Shuo Wang & Qizheng Zhang & Binlei Gong, 2021. "Epidemics, Convergence, and Common Prosperity: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(6), pages 117-138, November.
    9. Dongshui Xie & Caiquan Bai & Weiwei Xiao, 2022. "Institutional environment, development model transformation and North–South economic disparity in China," Growth and Change, Wiley Blackwell, vol. 53(4), pages 1877-1906, December.
    10. Yang, Tongbin & Zhou, Bo, 2024. "Local FinTech development, industrial structure, and north-south economic disparity in China," International Review of Financial Analysis, Elsevier, vol. 93(C).
    11. Guo, Di & Jiang, Kun & Xu, Chenggang & Yang, Xiyi, 2023. "Geographic clusters, regional productivity and resource reallocation across firms: Evidence from China," Research Policy, Elsevier, vol. 52(2).

    More about this item

    Keywords

    China; clustering; geography; growth and inequality; institutions;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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