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Opening up, Market Reform, and Convergence Clubs in China

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This paper evaluates the relationship between initial government policies and the emergence of convergence clubs in post-reform China. We test the structural stability of a global convergence equation using China's provincial data over the period 1985–2000. We find that the provinces cluster around two basins of attraction defined by initial opening-up. Domestic market reform exerts a positive and significant influence on provincial economic growth but has no threshold effect. The two convergence clubs exhibit strikingly different growth behaviors, suggesting that the roles of some growth-promoting factors, such as human capital and infrastructure, depend on whether an openness threshold is passed.
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Keywords: O47; O53; R11; convergence clubs; domestic market reform; opening up

Document Type: Research Article

Affiliations: Centre d’Etudes et de Recherches sur le Développement International (CERDI), University of Auvergne, 65, Boulevard Francois Mitterrand, 63000 Clermont-Ferrand, France

Publication date: June 1, 2008

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