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Economic Polarization Through Trade: Trade Liberalization and Regional Growth in Mexico

Ravi Kanbur and Anthony J. Venables

in Spatial Inequality and Development

Analyses the impact trade liberalization and economic integration have had on regional growth and regional disparities in Mexico over the last two decades. It is highlighted that the passage from an ... More

Analyses the impact trade liberalization and economic integration have had on regional growth and regional disparities in Mexico over the last two decades. It is highlighted that the passage from an import substitution system to membership of the General Agreement on Tariffs and Trade (GATT) first, and to economic integration in the North American Free Trade Agreement (NAFTA) later, has been associated with greater concentration of economic activity and territorial polarization. The analysis also shows that these changes herald a period of transition between two growth models. Regional growth in the final stages of the import substitution period was mainly characterized by convergence and linked to the presence of oil and raw materials and proximity to Mexico City. Economic liberalization and regional integration in NAFTA has been related to regional divergence, a reduction of the importance of Mexico City as the main market and to the emergence of an economic system in which the endowment of skilled labour starts to play a more important role.Less

Financial Development, Growth, and Regional Disparity in Post‐Reform China

Zhicheng Liang

in Inequality and Growth in Modern China

Deepening financial development and rapid economic growth in China have been accompanied by widening income disparity between the coastal and inland regions. This chapter examines the impacts of ... More

Deepening financial development and rapid economic growth in China have been accompanied by widening income disparity between the coastal and inland regions. This chapter examines the impacts of financial development on China's growth performance by employing panel data covering twenty-nine Chinese provinces over the period of 1990-2001 and applying the generalized method of moment (GMM) techniques. The empirical results show that financial development significantly promotes economic growth in coastal regions but not in the inland regions; the weak finance-growth nexus in inland provinces may help aggravate China's regional disparities.Less

Regional Development

Rosario G. Manasan and Shiladitya Chatterjee

in The Philippine Economy: Development, Policies, and Challenges

Attempts to evaluate the progress that has been made to date in reducing spatial inequality. More specifically, it aims to evaluate the pattern of regional economic development from 1975 to 2000, ... More

Attempts to evaluate the progress that has been made to date in reducing spatial inequality. More specifically, it aims to evaluate the pattern of regional economic development from 1975 to 2000, assess the gains, if any, in reducing regional disparities, and estimate the extent to which government policies have contributed to regional convergence. Employing convergence methodology, the study finds that there has been “alpha” convergence (a decline in overall regional inequality), and also often “beta” convergence (the poorer regions catching up to the richer ones), which is shown to correlate strongly with agricultural growth. Additionally, it draws attention to the key role of physical infrastructure in shaping regional outcomes, the country's experience with decentralization, and the vertical and horizontal fiscal imbalances among LGUs.Less

Growth, Structural Change, and Inequality: The Experience of Thailand

Isra Sarntisart

in Inequality Growth and Poverty in an Era of Liberalization and Globalization

This is the last of five country case studies on income inequality, and looks at the case of Thailand. Following on from a number of other studies, the study attempts to re‐examine the relationships ... More

This is the last of five country case studies on income inequality, and looks at the case of Thailand. Following on from a number of other studies, the study attempts to re‐examine the relationships between economic growth, structural change, and income inequality in Thailand. After an introduction, the second section, Economic Growth and Structural Change, provides a broad picture of the Thai economy, and the third, Trends in Income Inequality, reviews studies on the changes in income inequality from the 1960s through to the beginning of the 1990s. The fourth section, Factors Related to Income Distribution, examines industrialization planning, industrial protection policies, regional income disparities, and the minimum wage bill over the past four decades. The fifth section, Analysis of Income Inequality in 1988, 1992, and 1996, presents an analysis income inequality in those years according to the subgroups and source decompositions of income; the final section summarizes.Less

Why Is the Geography of Wealth More Unequal in Some Nations?

Mario Polèse

in The Wealth and Poverty of Regions: Why Cities Matter

This chapter explores the reasons behind regional disparity in wealth and why some nations have difficulty in overcoming this problem. Regional disparity can be viewed from different perspectives. A ... More

This chapter explores the reasons behind regional disparity in wealth and why some nations have difficulty in overcoming this problem. Regional disparity can be viewed from different perspectives. A region can be seen as being less prosperous because it allows for comparatively fewer activities or, alternatively, because its citizens are on average poorer than the citizens in the rest of the nation. First, to understand why, there is need to understand the mechanisms that caused regional inequalities to arise in the first place. What happens afterwards? Is there a predictable happy ending? Should we expect income disparities between central and peripheral places to widen or to lessen over time? The answer is not the same for all nations. The key issue revolves around the long-term effects of capital flows and, especially, of migration on the gap between poor and rich regions. National economic growth has over time led to greater regional income equality and, ironically, it has generated greater inequality.Less

International Trade, Location, and Wage Inequality in China

Ravi Kanbur and Anthony J. Venables

in Spatial Inequality and Development

Models of economic geography predict that transportation costs directly affect demand for goods and the supply of intermediate inputs. One of the reasons that international trade is concentrated in ... More

Models of economic geography predict that transportation costs directly affect demand for goods and the supply of intermediate inputs. One of the reasons that international trade is concentrated in the coastal provinces of China is that they have lower transportation costs in transporting goods to other countries than do provinces in the interior. Examines the relationship between the provincial wage rate and each province’s access to international markets, and to suppliers of intermediate inputs. A gravity equation is first estimated to construct these ‘market access’ and ‘supplier access’ variables. In the second stage, the effect of market access and supplier access on the wage rate is estimated. It is found that about one-quarter of the provincial wage differences in the coastal provinces and 15% of the wage differences in the interior provinces can be explained by these economic geography variables.Less

Education, Employment, and Unemployment

Tony Atkinson, Bea Cantillon, Eric Marlier, and Brian Nolan

in Social Indicators: The EU and Social Inclusion

Examines the fields of education, employment, and unemployment. It starts from the social indicators on low education, joblessness, long‐term unemployment and regional disparities proposed by the ... More

Examines the fields of education, employment, and unemployment. It starts from the social indicators on low education, joblessness, long‐term unemployment and regional disparities proposed by the European Commission. However, it goes beyond these, covering also differential access to education, employment activation, and the working poor and low pay.Less

Regional Disparities

Hans-Joachim Bürkner

in The Handbook of Political, Social, and Economic Transformation

This chapter provides a stocktaking of the conceptualization of the spatial dimension of postcommunist social change. It traces the shifts in academic concepts which sought to grasp the effects of ... More

This chapter provides a stocktaking of the conceptualization of the spatial dimension of postcommunist social change. It traces the shifts in academic concepts which sought to grasp the effects of transition on the regional level and the diversification of regional trajectories. It identifies three distinct stages of transition research which represents such shifts. An initial phase of nation state-centred accounts of regional transition was followed by a period which highlighted the diversification of patterns of regional disparities, focusing on regional capitals and border regions, and establishing globalization as an important factor of new core–periphery relations and interregional competition. A final post-transition stage has been described as being dominated by socio-spatial polarization and the increasing vulnerability of regions in the face of neoliberal policies and recurring global economic crises. Formerly clear-cut concepts relating inequality to the legacies of earlier stages of transition have gradually vanished, leaving a theoretical gap.Less

Disparities among Regional Economies: Spatial (Dis)Aggregation

Robert M. Townsend

in Financial Systems in Developing Economies: Growth, Inequality and Policy Evaluation in Thailand

This chapter spatially disaggregates the national economy into provinces, counties (amphoes), villages, households, and individuals. Provincial product displays great differences from high to low, in ... More

This chapter spatially disaggregates the national economy into provinces, counties (amphoes), villages, households, and individuals. Provincial product displays great differences from high to low, in poverty and in the fractions attributed to manufacturing and agriculture. Inequality in provincial income from manufacturing is much greater than inequality in non-farm income in household surveys. A simple model can explain much of the apparent difference. Projections establish the spatiotemporal patterns of income growth with initial concentration, then relatively dramatic convergence. Across-village inequality is high when the level of income is low within provinces. Household income change is hard to predict from macro/temporal shocks alone. Occupation, geography, and ground cover matter. More generally, households experience a variety of idiosyncratic and regional shocks. Households vary in diversification strategies, such as migration. Northeast Thailand, for example, differs dramatically after decades of growth from its Mekong basin counterparts in Cambodia, Laos, and Vietnam.Less

The Political Economy of Vertical Support and Horizontal Networks

Jae Ho Chung

in Centrifugal Empire: Central-Local Relations in China

Suggests that whereas Beijing's policy support and centrally-induced horizontal networks were important in the early phases of the reform, the center's resource support and voluntarily-formed lateral ... More

Suggests that whereas Beijing's policy support and centrally-induced horizontal networks were important in the early phases of the reform, the center's resource support and voluntarily-formed lateral linkages have become increasingly crucial in recent years.Less

Regional divergence

Kai-yuen Tsui

in The Oxford Companion to the Economics of China

This chapter examines the persistence of regional disparities in China. Empirical evidence on long-term regional convergence shows that the quest for redress in regional imbalances remains elusive. ... More

This chapter examines the persistence of regional disparities in China. Empirical evidence on long-term regional convergence shows that the quest for redress in regional imbalances remains elusive. The oscillation in regional inequality is linked to China’s evolving institutional landscape. Despite their raison d’être evaporating, the persistence of some pre-reform institutions such as the household registration system (Hukou) has continued to be in the spotlight, not least because of its alleged impact on interjurisdictional factors and resource mobility and thus regional convergence.Less

Government Commitment and the Outcome of Privatization in China

Yang Yao

in Governance, Regulation, and Privatization in the Asia-Pacific Region

The performance record of privatization in China varies from city to city. This chapter uses recent survey data to assess the disparities in regional performance, which is attributed to the different ... More

The performance record of privatization in China varies from city to city. This chapter uses recent survey data to assess the disparities in regional performance, which is attributed to the different degrees of local government commitment to privatization. The chapter is organized as follows. Section 10.1 presents a brief review of the Chinese government's policy toward privatization in the last twenty years. Section 10.2 shows the regional disparity in firm performance by presenting the econometric results on six cities. Section 10.3 constructs a theoretical model to explain the relationship between government commitment and post-privatization performance. Section 10.4 presents the government reform experience in Shunde, Guangdong province. Section 10.5 concludes with a discussion of the implications of the study. A commentary is also included at the end of the chapter.Less

The Regional Origins of Wealth: Where It All Began

Mario Polèse

in The Wealth and Poverty of Regions: Why Cities Matter

This chapter provides information about the regional origins of wealth and prosperity in the preindustrial period. Differences in place prosperity existed in all great preindustrial civilizations. ... More

This chapter provides information about the regional origins of wealth and prosperity in the preindustrial period. Differences in place prosperity existed in all great preindustrial civilizations. Some towns were larger and richer than others. Peasants, tradesmen, and aristocrats were richer in some areas than in others. Regional income disparities—between regions of the same nation—would also have seemed bizarre to most observers in preindustrial times. The modern nation state with its well-defined borders and shared sense of national destiny is recent invention. Historical evidence on development differences within nations in preindustrial times is understandably sparse. The little evidence that exists suggests that regional welfare differences were, as a rule, less acute than those found in many nations today. Income differences between social classes—between local aristocrats and peasants—were huge, of course; but those privileged few were in most places but a fraction of the total population, with the result that average incomes per person did not vary greatly between regions.Less

China as a Centrifugal Empire: Size, Diversity, and Local Governance

Jae Ho Chung

in Centrifugal Empire: Central-Local Relations in China

Poses the question: “Why are Chinese leaders so preoccupied with local governance?” and outlines a framework of analysis.

The Center’s Instruments of Local Control

Jae Ho Chung

in Centrifugal Empire: Central-Local Relations in China

Suggests that the People’s Republic’s principal mode of local control resembles that of the traditional China more than that of the pre-1949 revolutionary era in terms of preventive mechanisms, ... More

Suggests that the People’s Republic’s principal mode of local control resembles that of the traditional China more than that of the pre-1949 revolutionary era in terms of preventive mechanisms, investigative instruments and tools of suppression,Less

Determinants of Local Discretion in Implementation: Exploring Policy-Contingent Variations

Jae Ho Chung

in Centrifugal Empire: Central-Local Relations in China

Presupposes that, with other things (i.e., patronage networks and societal demands) being similar among different regions, the level of local discretion permitted in implementation is likely to vary ... More

Presupposes that, with other things (i.e., patronage networks and societal demands) being similar among different regions, the level of local discretion permitted in implementation is likely to vary with different types of policy issues - i.e., policy scope, policy nature, and the degree of urgencyLess

China Goes Local (Again): Assessing Post-Mao Decentralization

Jae Ho Chung

in Centrifugal Empire: Central-Local Relations in China

Assesses the impact of post-Mao decentralization on central-local relations and concludes that the former has not necessarily or uniformly favored localities at the expense of central control.