This paper is concerned with analysing the regional disparities in China during the 1990s and the main causes behind the increased regional disparities. It identifies regional openness, along with the nature of property rights, as a critical influencing factor on regional disparities, while finding that technological capabilities have a complex association with economic growth. In particular, the empirical evidence shows that non-firm R & D activities are highly concentrated in the major urban cities in China to such an extent that these resources appear to be negatively associated with income level when the major cities are excluded from the analysis. Moreover, the coastal provinces have a very low level of non-firm R & D activities despite their high level of regional openness. However, firm R & D activities are relatively high. This reflects the significant difference in terms of development pattern between inland and coastal provinces. These findings have profound policy implications in the nature and potential economic reform in China.
Manchester, UK, CRC Working Paper, No. 71, 34 pp.