GROWTH DYNAMICS AND CONDITIONAL CONVERGENCE AMONG CHINESE PROVINCES: A PANEL DATA INVESTIGATION USING SYSTEM GMM ESTIMATOR

The paper aims at contributing to the debate on conditional convergence across Chinese provinces by using the most recent techniques of dynamics panel data models. The analysis covers twenty-nine Chinese provinces from 1995 to 2009 and is based on the estimation of growth equations using system GMM estimator. Three main results can be drawn from our empirical investigations. First, investment in physical capital and education have played an important role in promoting economic growth. Second, the hypothesis of conditional convergence is verified over the period 1995-2009. Third, Chinese provinces have converged more quickly over their steady-state level during the period 2004-2009. Finally, we suggest that the acceleration of the speed of conditional convergence in the recent years may be a consequence of the implementation of regional development programs during the 2000s.