Technology diffusion, spatial effects and productivity growth in the Chinese provinces

This paper investigates spatial spillover effects of productivity in China. We set up a model in which a Chinese province achieves productivity growth by taking advantage of productivity spillovers from the world frontier and from other Chinese provinces. By using fixed effects and GMM panel data methods, we show that productivity growth in an inland province in China can be partly attributed to productivity spillover effects of other provinces. We also show that provincial human capital plays an important role in determining the magnitude of these spillover effects.