Transcript ECONOMIC GROWTH AND SUBJECTIVE WELL

Globalization and Regional Income Inequality:
Empirical evidence from within China
Paper by Guanghua Wan, Ming Lu and Zhao Chen
Stéphanie Carret
Faculty of Economic Science
University of Warsaw
22th October, 2009
Stéphanie Carret
Development Workshop
1
The Planning for today
1. Review of the paper: main ideas
2. Analysis of illustrative graphs
3. Questions raised?
« Spilled water is difficult to catch »
Chinese Proverb
Stéphanie Carret
Development Workshop
2
China’s geography
 3d largest country
 9M km2 (Poland,
300000 km2)
 4,845 km ENE – WSW
 3,350 km SSE – NNW
 1.3 billion people in
 23 Provinces
 5 Autonomous Regions
 4 Municipalities
 2 Special Administrative
Regions
Stéphanie Carret
Development Workshop
3
Review of the paper:
main ideas (1)
 The authors examine the heat-debate about the impact of
globalization (trade & liberalization) on inequality level
 Empirical evidence with the case of China, an emergent country and
power
 Dataset: 29 regions between 1987 and 2001 (excluding HK, TW…)
 Economists’ views on globalization impact
 It increases inequality (Stiglitz)
 It diminishes inequality (Ben David)
 No relation with inequality (Sala i Martin)
 U-shaped pattern for the inequality/trade function (Krugman)
 Problematic of the paper:
 How globalization and regional income inequality is related in China?
 How much are they related?
Stéphanie Carret
Development Workshop
4
Review of the paper:
main ideas (2)
 China’s insertion in globalization in a few facts &
figures
 Deng Xiaoping’s famous « get rich!» message at the end of
the 70’s. « Doesn’t matter if the cat is black or grey; as long
as it catches mice »
 20 years of opening, largest FDI’s receiver and member of
WTO since 2002
 In 1994, trade (I/E) was almost completely deregulated
 From rank 32 to 5 as trader in the world economy between
1978 and 2002
 Chinese international trade in 2006 =$600billion, half of its
GDP
 Special Eco Zones and Open cities end 70’s: FDI flows
Stéphanie Carret
Development Workshop
5
Review of the paper:
main ideas (3)
 3 different regions in China: East, Centre and
West
 these regions experience different level in FDI,
income, capital, privatization (see GDPs table)…
 See Figure 1.1 for FDI and openness levels
 Even if unified national policy:
 different pace of globalization catching
 Non economical factors: pre-dispositioned regions
(coastal East and South), resources already available
for FDI attraction, culture, local/regional
governments…
Stéphanie Carret
Development Workshop
6
Inequality at the country’s level
 The residual
contribution
 Increase of
Gini coeff
Stéphanie Carret
Development Workshop
7
Analysis: What are the contributive
factors to inequality?
Stéphanie Carret
Development Workshop
8
Ranking of contributive factors,
Gini Index
Stéphanie Carret
Development Workshop
9
Conclusion & Questions
 Solutions & Problems
 More public investment in the lagging regions
 Ease migration to the fast growing regions
 Institutional innovation to improve the performance of fiscal
decentralization: give fiscal advantages
 Targeted social protection for the poorest classes
 Development of financial market accross country: government’s
measures
 Promote FDI and trade in West and Central regions
 Ethnical troubles
 China has to deal constantly with the tackling of inequalities:
SOCIAL PACT
 The global rank of China in terms of inequality: a
necessity during the emergence?
Stéphanie Carret
Development Workshop
10
Source:
Paper:
“Globalization and Regional Income Inequality: Empirical
evidence from within China”,Paper by Guanghua Wan, Ming Lu and
Zhao Chen
Stéphanie Carret
Development Workshop
11
Questions?
Thank you.
Stéphanie Carret
Development Workshop
12