Estimating Chinese Interprovincial OutPut Spillovers with Provincial Input-Output Tables

This paper aims at estimating productivity improvement of Chinese 17 relatively backward provinces in manufactures through importing manufactured intermediates from advanced provinces on the basis of just published 2002 national and provincial input-output tables. As Chinese regional inequality remains large, North-South spillover models of trade are appropriate to guide this study. Applying reliable methods to approximate net interprovincial imports by province and sector and the allocation of imported manufactured inputs among sectors within each province, we use a Cob-Douglas production function incorporating Dixit-Stiglitz type increasing returns to variety to deal with the manufactured inputs, and treat the output spillovers as one part of total factor productivity. According to our estimations, as expected, interprovincial imports of manufactured inputs have significant impacts on industrial sectors as well on all sectors of these provinces.