A Panel-Data Sensitivity Analysis of Regional Growth in China

This paper examines the contributions of various factors on China's economic growth. The methodology is discussed in papers by Levine and Renelt (1992) and Sala-i-Martin (1997). We estimate regressions with growth of output and a variety of total 49 factors, gathered from a variety of sources. Using the panel data from 1978 to 1999 and for 30 provinces, autonomous regions and independently administered cities, we find that provinces with more innovation capital and with more bank deposit to GDP ratios tend to experience higher economic growth. We also find that provinces which collect more revenue, but spend less will have lower growth rates. Out of the 49 variables, other factors that negatively correlated to growth rates also include implied population (both numbers and ratio) migrating into a province, SOE industrial output as percentage of total industrial output, SOE staff & workers as percentage of total employment, kilometers of railroad per square kilometers of area, high education teachers as percentage of population, and net export relative to GDP. Primary school students enrolled as percentage of population and telephones per capital are found to be positively correlated to growth