Regional economic growth in China from a Kaldorian perspective: A tale of two cities
DOI:
https://doi.org/10.13133/2037-3643_73.295_2Keywords:
Regional economic growth, Kaldor, Nanjing, SuzhouAbstract
This paper sets out to analyse and compare the growth performances of two Chinese cities, Nanjing and Suzhou. Their growth performances have varied over time, with one city outperforming the other in some periods, and with the reverse scenario taking place in other times. In order to explain this phenomenon, this study makes use of a Kaldorian analytical framework, highlighting key notions such as demand-led growth, path-dependency, lock-in effects and inter-relatedness. It will be argued that regional economic growth is explained by the match – or otherwise – between a city’s productive structure and China’s national aggregate demand composition.
JEL codes:P25; R11; N95
References
Angeriz A., McCombie J.S.L., Roberts M. (2008), “New Estimates of Returns to Scale and Spatial Spillovers for EU Regional Manufacturing, 1986-2002”, International Regional Science Review, 31 (1), 62-87.
Antenucci F., Deleidi M., Paternesi Meloni W. (2020), “Kaldor 3.0: An Empirical Investigation of the Verdoorn-augmented Technical Progress Function”, Review of Political Economy, pp. 1-28.
Argyrous G. and Bamberry G. (2009), “Cumulative causation and industrial development: The regional stage”, in Berger S. (ed.), The Foundations of Non-Equilibrium Economics: The Principle of Circular and Cumulative Causation, London and New York: Routledge.
Arrow K.J. (1962), “The economic implications of learning by doing”, The Review of Economic Studies, 29 (3), pp. 155-173.
BASF (2014), BASF to increase production capacity for tertiary Butylamine plant in Nanjing, China, online press release, October 28th, 2014. Available from https://www.basf.com/ru/ru/media/news-releases/2014/10/p-14-370.html (date of access: May 17, 2020).
Baum R. and Shevchenko A. (1999), “The State of the State”, in Goldman M., MacFarquhar R. (eds.), The Paradox of China’s Post-Mao Reforms, pp. 333-362, Cambridge (MA) and London: Harvard University Press.
Bernat G.A. (1996), “Does Manufacturing Matter? A Spatial Econometric View of Kaldor’s Laws”, Journal of Regional Science, 36 (3), pp. 463-77.
Bhattacharjea A. (2010), “Did Kaldor Anticipate the New Economic Geography? Yes, but…”, Cambridge Journal of Economics, 34 (6), pp. 1057-1074.
Carnevali E., Godin A., Lucarelli S., Veronese Passarella M. (2020), “Productivity growth, Smith effects and Ricardo effects in Euro Area’s manufacturing industries”, Metroeconomica, 71 (1), pp. 129-155.
Chen C.-H. and Wu H.-L. (2005), “Determinants of regional growth disparity in China’s transitional economy”, Journal of Economic Studies, 32 (5), pp. 406-419.
Chen L. (2014), “Varieties of Global Capital and the Paradox of Local Upgrading in China”, Politics & Society, 42 (2), pp. 223-52.
Chung, H-W. (2003), “Economic Reform and Path-dependence in China: A comparative study of reform and development in Nanjing and Suzhou”, Asian Perspective, 27 (2), pp. 205-239.
Chung J.H. (ed.) (1999), Cities in Post-Mao China: Recipes for economic development in the reform era, London and New York: Routledge.
Corsi M. and D’Ippoliti C. (2013), “The productivity of the public sector: A classical view”, PSL Quarterly Review, 66 (267), pp. 403-434.
Deleidi M., Paternesi Meloni W., Salvati L., Tosi F. (2020), “Exploring the Determinants of Productivity Growth in Italian Regions: A Kaldorian Perspective”, ASTRIL Working Papers, no. 005, Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
Dixon R.J. and Thirlwall A.P. (1975), “A Model of Regional Growth-Rate Differences on Kaldorian Lines”, Oxford Economic Papers, 27 (2), pp. 201-214.
Donnan S. and Leahy J. (2016), “World trade records biggest reversal since crisis”, Financial Times, February 26, 2016. Available from https://www.ft.com/content/9e2533d6-dbd8-11e5-9ba8-3abc1e7247e4 (date of access: May 16, 2020).
Duranton G. and Puga D. (2000), “Diversity and Specialisation in Cities: Why, Where and When Does it Matter?”, Urban Studies, 37 (3), pp. 533-555.
Durlauf S. (1994), “Spillovers, stratification and inequality”, European Economic Review, 38 (3-4), pp. 836-45.
Dutt A.K. (2006), “Aggregate demand, aggregate supply and economic growth”, International Review of Applied Economics, 20 (3), pp. 319-336.
Fingleton B. and McCombie J.S.L. (1998), “Increasing Returns and Economic Growth: Some Evidence from Manufacturing from the European Union Regions”, Oxford Economic Papers, 50 (1), pp. 89-105.
Fujita M., Krugman P., Venables A.J. (1999), The spatial economy: Cities, regions and international trade, Cambridge (MA): MIT Press.
Glaeser E., Kallal H.D., Scheinkman J.A., Shleifer A. (1992), “Growth in cities”, Journal of Political Economy, 100 (6), pp. 1126-1152.
Glaeser E., Scheinkman J.A., Shleifer A. (1995), “Economic growth in a cross-section of cities”, Journal of Monetary Economics, 36 (1), pp. 117-143.
Gomes A.P. (2020), “Local level institutional complementarities in contemporary China: A comparison between Nanjing and Suzhou”, Revue de la régulation, 27 (1), pp. 1-29, DOI: 10.4000/regulation.16716
Hansen J.D. and Zhang J. (1996), “A Kaldorian Approach to Regional Economic Growth in China”, Applied Economics, 28 (6), pp. 679-85.
Harris R.I.D. and Lau E. (1998), “Verdoorn’s Law and Increasing Returns to Scale in the UK Regions, 1968-91: Some New Estimates Based on the Cointegration Approach”, Oxford Economic Papers, 50 (2), pp. 201-19.
Heilmann S. (2008), “Policy Experimentation in China’s Economic Rise”, Studies in Comparative International Development, 43 (1), pp. 1-26.
Jiangsu Provincial Bureau of Statistics (JSBS) [Jiangsu shen tongji ju], accessible online from http://tj.jiangsu.gov.cn/
Jiangsu Provincial Bureau of Statistics (JSBS) [Jiangsu shen tongji ju] (2004), Jiangsu Jingji Pucha Nianjian (2004) [Jiangsu Economic Census Yearbook], Beijing, Zhongguo tongji chubanshe [China Statistics Press].
Jiangsu Provincial Bureau of Statistics (JSBS) [Jiangsu shen tongji ju] (2014), Jiangsu tongji nianjian (2014) [Jiangsu Statistical Yearbook], Beijing, Zhongguo tongji chubanshe [China Statistics Press].
Kaldor N. (1957), “A Model of Economic Growth”, Economic Journal, 67 (268), pp. 591-624.
Kaldor N. (1970), “The Case for Regional Policies”, Scottish Journal of Political Economy, 17 (3), pp. 337-348.
Kaldor N. (1972), “The irrelevance of equilibrium economics”, Economic Journal, 82 (328), pp. 1237-55.
Kaldor N. (1985), Economics Without Equilibrium, Cardiff (UK): University College Cardiff Press.
Kaldor N. and Mirrlees J.A. (1962), “A New Model of Economic Growth”, The Review of Economic Studies, 29 (3), pp. 174-192.
Klibaner M., Zhou J., Brown W., Zhang J. (2014), “China’s City Winners: Nanjing City Profile”, World Winning Cities, Global Foresight Series 2014, Chicago: Jones Lang LaSalle.
Kroeber A. (2016), China’s Economy: What everyone needs to know, London: Oxford University Press.
Krugman P. (1991), “Increasing Returns and Economic Geography”, Journal of Political Economy, 99 (3), pp. 483-499.
Krugman P. (1993), “First nature, second nature and metropolitan location”, Journal of Regional Science, 3 (2), pp. 129-44.
Leon-Ledesma M.A. (2000), “Economic Growth and Verdoorn’s Law in the Spanish Regions, 1962–1991”, International Review of Applied Economics, 14 (1), pp. 55-69.
Leon-Ledesma M.A. (2002), “Cumulative Growth and the Catching-Up Debate From a Disequilibrium Standpoint”, in McCombie J.S.L., Pugno M., Soro B. (eds.), Productivity Growth and Economic Performance: Essays on Verdoorn’s Law, New York: Palgrave Macmillan.
Lucas R.E. (1988), “On the Mechanisms of Economic Development”, Journal of Monetary Economics, 22 (1), pp. 3-42.
Martin R. (1999), “The New ‘Geographical Turn’ in Economics: Some Critical Reflections”, Cambridge Journal of Economics, 23 (1), pp. 65-91.
Martinho V. (2011), “Spatial Autocorrelation and Verdoorn Law in Portugal”, Working Papers, n. 11/2011, Department of Economics, University of Verona.
McCombie J.S.L. (2002), “Increasing Returns and the Verdoorn Law from a Kaldorian Perspective”, in McCombie J.S.L., Pugno M., Soro B. (eds.), Productivity Growth and Economic Performance: Essays on Verdoorn’s Law, New York: Palgrave Macmillan.
McCombie J.S.L., de Ridder J.R. (1984), “The Verdoorn Law Controversy: Some New Empirical Evidence Using U.S. State Data”, Oxford Economic Papers, 36 (2), pp. 268-284.
McCombie J.S.L. and Thirlwall A.P. (1994), Economic Growth and the Balance-of-Payments Constraint, London: Macmillan.
McCombie J.S.L., Spreafico M., Xu S. (2018), “Productivity growth of the cities of Jiangsu province, China: a Kaldorian approach”, International Review of Applied Economics, 32 (4), pp. 450-471, DOI: 10.1080/02692171.2017.1351529
Michl T. R., (1985), “International comparisons of productivity growth: Verdoorn’s law revisited”, Journal of Post Keynesian Economics, 7 (4), pp. 474-492.
National Bureau of Statistics of China (NBS) (various years) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (various years), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
National Bureau of Statistics of China (NBS) (2004) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (2004), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
National Bureau of Statistics of China (NBS) (2010) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (2010), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
National Bureau of Statistics of China (NBS) (2012) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (2012), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
National Bureau of Statistics of China (NBS) (2014) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (2014), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
National Bureau of Statistics of China (NBS) (2016) [Zhongguo Guojia Tongji Ju], Zhongguo tongji nianjian [China Statistical Yearbook] (2016), Beijing, Zhongguo tongji chubanshe [China Statistics Press].
Palley T.I. (2002), “Pitfalls in the theory of growth: An application to the balance-of-payments-constrained growth model”, in Setterfield M. (ed.), The Economics of Demand-Led Growth: Challenging the Supply-Side Vision of the Long Run, pp. 115-125, Cheltenham: Edward Elgar.
Paschaloudis D. and Alexiadis S. (2001), “A Kaldorian Approach to the Economic Growth of Greek Regions”, Seoul Journal of Economics, 14 (4), pp. 1-22.
Peck J. (2016), “Economic Rationality meets Celebrity Urbanology: Exploring Edward Glaeser’s City”, International Journal of Urban and Regional Research, DOI: 10.1111/1468-2427.12321
Peck J. and Zhang J. (2013), “A variety of capitalism… with Chinese characteristics?”, Journal of Economic Geography, 13 (3), pp. 357-396.
Postiglione P., Andreano M., Benedetti R. (2017), “Spatial Clusters in EU Productivity Growth”, Growth and Change, 48 (1), pp. 40-60, DOI: 10.1111/grow.12165
Roberts, M. (2001), “Some Preliminary Results for the UK Counties, 1981-1991”, Department of Land Economy Working Papers, University of Cambridge.
Roberts M. (2004), “The Growth Performances of the GB Counties: Some New Empirical Evidence for 1977-1993”, Regional Studies, 38 (2), pp. 149-165, DOI: 10.1080/0034340042000190136
Roberts M. and Setterfield M. (2010), “Endogenous Regional Growth: A Critical Survey”, in Setterfield M. (ed.), Handbook of alternative theories of economic growth, pp. 431-450, Cheltenham: Edward Elgar.
Rocha I. (2018), “Manufacturing as Driver of Economic Growth”, PSL Quarterly Review, 71 (285), pp. 103-138.
Scott A. (2004), “A perspective of economic geography”, Journal of Economic Geography, 4 (5), pp. 479-499.
Setterfield M. (1997), “‘History versus equilibrium’ and the theory of economic growth”, Cambridge Journal of Economics, 21 (3), pp. 365-78.
Setterfield M. (2002), “A model of Kaldorian traverse: Cumulative causation, structural change and evolutionary hysteresis”, in Setterfield M. (ed.), The Economics of Demand-Led Growth: Challenging the Supply Side Vision of the Long Run, Cheltenham: Edward Elgar.
Setterfield M. (2003), “Supply and Demand in the Theory of Long-run Growth: Introduction to a symposium on demand-led growth”, Review of Political Economy, 15 (1), pp. 23-32, DOI: 10.1080/09538250308440
Skott P. (2016), “Autonomous Demand, Harrodian Instability and the Supply Side”, Economics Department Working Paper Series, n. 2016-16, Amherst (MA): University of Massachusetts – Amherst.
Sylos Labini, P. (1983), “Factors affecting changes in productivity”, Journal of Post Keynesian Economics, 6 (2), pp. 161-179.
Szirmai A. (2012), “Industrialisation as an Engine of Growth in Developing Countries, 1950- 2005”, Structural Change and Economic Dynamics, 23 (4), pp. 406-20.
Thirlwall A.P. (1983), “A Plain Man’s Guide to Kaldor’s Growth Laws”, Journal of Post Keynesian Economics, 5 (3), pp. 345-358.
Thirlwall A.P. (2013), “Kaldor’s 1970 Regional Growth Model Revisited”, School of Economics Working Papers, n. 1311, Canterbury: University of Kent.
Tridico P. and Pariboni R. (2018), “Inequality, financialization, and economic decline”, Journal of Post Keynesian Economics, 41 (2), pp. 236-259, DOI: 10.1080/01603477.2017.1338966
Wang J., Wang X., Zhang J., Shi J. (2011), “The formation and regeneration of old industrial zones in Nanjing City”, Local Economy, 26 (5), pp. 373-383.
Wang J.H. and Lee C.K. (2007), “Global production networks and local institution building: The development of the information technology industry in Suzhou, China”, Environment and Planning A: Economy and Space, 39 (8), pp. 1873-1888.
Wang L., Shen J., Chung C.K.L. (2015), “City profile: Suzhou – a Chinese city under transformation”, Cities, 44 (2015), pp. 60-72.
Wang P. (2009), Three essays on monetary policy and economic growth in China, PhD dissertation, University of Ottawa.
Wei Y.D. (2010), “Beyond new regionalism, beyond global production networks: Remaking the Sunan model, China”, Environment and Planning C: Politics and Space, 28 (1), pp. 72-96.
Wei Y.D. (2015a), “Network Linkages and Local Embeddedness of Foreign Ventures in China: The Case of Suzhou Municipality”, Regional Studies, 49 (2), p. 287-299, DOI: 10.1080/00343404.2013.770139
Wei Y.D. (2015b), “Zone fever, project fever: Development policy, economic transition, and urban expansion in China”, Geographical Review, 105 (2), pp. 156-177.
Wei Y.D., Luo J., Zhou Q. (2010), “Location Decisions and Network Configurations of Foreign Investment in Urban China”, The Professional Geographer, 62 (2), pp. 264-283.
Wu, F., Xu, J., Gar-On Yeh, A. (2007), Urban Development in Post-Reform China: State, Market, and Space, London and New York: Routledge.
Yao S. and Zhang Z. (2001), “Regional Growth in China Under Economic Reforms”, Journal of Development Studies, 38 (2), pp. 167-186, DOI: 10.1080/00220380412331322301
Young A.A. (1928), “Increasing Returns and Economic Progress”, Economic Journal, 38 (152), pp. 527-542.
Zeng G. and Bathelt H. (2011), “Divergent growth trajectories in China’s chemical industry: The case of the newly developed industrial parks in Shanghai, Nanjing and Ningbo”, GeoJournal, 76 (6), pp. 675-698.
Zuppo C. (2012), “Defining ICT in a boundaryless world: The development of a working hierarchy”, International Journal of Managing Information Technology (IJMIT), 4 (3), pp. 13-22.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 Alexandre Gomes
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
