Openness, Technological Capabilities and Regional Disparities in China

This paper is concerned with analysing of regional disparities in China during the 90's and the main causes behind the increased regional disparities. It has identified regional openness, along with the nature of property right, as a critical influencing factor to the regional disparities, while found that the technological capabilities have complex association with economic growth. In particular, the empirical evidence has shown that non-firm R & D activities are highly concentrated in the major urban cities in China to such an extent that these resources appear to be negatively associated with income level when the major cities are excluded out of the analysis. Moreover, the coastal provinces have a very low level of non-firm R & D activities despite their high level of regional openness. However, firm R & D activities are relatively high. This reflects the significant difference in terms of development pattern between inland and coastal provinces. These findings have profound policy implications in the nature and potential economic reform in China.