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Mt. Huangshan, Anhui (Copyright © by Arne Hückelheim, September 23, 2009)
Chapter 10
10. Regional Diseconomies and Development Strategy
10.1 Spatial comparative advantages
10.2 Spatial economic separation
10.3 Spatial diseconomies and China
10.4 Regional development strategies
Keywords:
• comparative advantage,
• spatial diseconomies,
• regional economics,
• interregional separation,
• spatial economic integration,
• transprovincial border economic zone,
• development strategy,
• location quotient
10.1 Spatial comparative advantages
10.1.1 General overview
10.1.2 Location quotient
10.1.3 Empirical evidence
Note: Bohai Sea rim=Beijing, Tianjin, coastal Hebei and Shandong and Liaodong peninsulas; Pearl river delta=Guangdong and northern Hainan (Hong Kong and Macau are excluded); Yangtze river delta=Shanghai, Zhejiang and southern Jiangsu.
Table 10.1 Comparative advantages of China’s three economic engines
output national Totalindustry in output National
output regional Totalindustry in output s'Region
i
ij
The location quotient (LQ) of region j in industry i can be calculated as:
Interpreting the Location Quotient (LQ)
• LQ <1, suggesting that local economy is less than was expected for a given industry. Therefore, that industry is not even meeting local demand for a given good or service.
• LQ=1, suggesting that the local economy is exactly sufficient to meet the local demand for a given good or service. Therefore, that industry is meeting local demand for the given good or service.
• LQ>1, suggesting that local economy is greater than expected and it is therefore assumed that there is an "extra" part of goods and services. This extra economy then must export their goods and services to other areas.
Province Coal Petro-leum
Metal Non-metal
Timber Food
Anhui 1.42 0.00 0.93 1.61 0.18 1.34Beijing 0.63 0.00 0.44 0.62 0.00 1.90Fujian 0.43 0.00 0.33 1.55 6.23 1.45Gansu 0.75 2.22 1.01 0.92 0.83 0.46Guangdong 0.21 0.16 0.82 1.58 0.14 1.78Guangxi 0.32 0.00 2.58 1.16 0.34 1.59Guizhou 2.63 0.00 1.30 0.97 1.94 0.76Hainan 0.04 0.00 3.58 0.83 0.54 1.59Hebei 1.51 1.30 2.05 0.75 0.00 0.57Heilongjiang 0.58 2.79 0.12 0.16 3.12 0.32Henan 1.57 0.94 1.24 0.37 0.00 0.91Hubei 0.23 0.71 0.66 2.45 0.17 1.37Hunan 1.21 0.00 2.53 1.44 0.43 1.19Inner Mongolia
1.48 0.38 1.33 0.95 5.60 0.78
Jiangsu 0.79 0.14 0.16 1.62 0.00 1.66Jiangxi 1.08 0.00 3.43 1.36 1.38 1.05
Table 10.2 Interprovincial comparative advantage indexes
Province Coal Petroleum Metal Non-metal Timber FoodJilin 0.79 0.95 0.56 0.54 6.50 0.88Liaoning 1.03 1.51 1.18 0.99 0.00 0.75Ningxia 3.70 0.42 0.05 0.25 0.00 0.52Qinghai 0.26 2.70 1.13 1.37 0.09 0.37Shaanxi 1.22 0.58 3.47 0.64 0.67 0.82Shandong 0.90 1.13 0.97 1.22 0.00 1.01Shanghai 0.00 0.00 0.01 0.07 0.04 2.31Shanxi 4.70 0.00 0.89 0.25 0.03 0.20Sichuan 1.10 0.61 0.43 1.35 1.74 1.16Tianjin 0.01 2.05 0.02 0.56 0.00 1.12Tibet 0.03 0.00 5.05 1.88 10.7 0.53Xinjiang 0.35 3.11 0.44 0.26 0.21 0.37Yunnan 0.71 0.40 3.24 0.66 1.83 1.09Zhejiang 0.21 0.00 0.62 2.21 0.01 1.82
Table 10.2 (Cont’d)
10.2 Spatial economic separation
10.2.1 Geographical barriers
10.2.2 Administrative barriers
10.2.3 Ethno-cultural barriers
Topographical type
Core counties
Peripheral counties
2-d border 3-d border
Plain area 623.46 733.50 411.03
Mountain area 774.24 532.95 623.01
All 746.10 607.44 501.88
Note: An i-d border county is one which is bordered by i provinces.Source: Guo (1996, 73-4).
Table 10.3 Average income level (yuan/person) by region
Province Main ethnic groups Main languages (dialects)Anhui Han, Hui, She MandarinBeijing Han, Hui, Manchu MandarinChongqing Han, Yi MandarinFujian Han, She, Hui Min, KejiaGansu Han, Hui, Tibetan Mandarin, MongolianGuangdong Han, Yao, Zhuang Cantonese (Yue), Kejia, Miao-YaoGuangxi Zhuang, Han, Yao Chinese dialects, DaiGuizhou Han, Miao, Buyi Chinese dialects, DaiHainan Han, Li, Miao Chinese dialects, Kejia, DaiHebei Han, Hui, Manchu MandarinHeilongjiang Han, Manchu, Korean MandarinHenan Han, Hui, Mongol MandarinHubei Han, Tujia, Hui Chinese dialectsHunan Han, Tujia, Miao Xiang (Chinese dialects), Miao-YaoInner Mongolia
Mongol, Han Mongolian, Mandarin
Table 10.4 China’s ethnic and linguistic differences, by province
Province Main ethnic groups Main languages (dialects)Jiangsu Han, Hui, Manchu Chinese dialects, Mandarin, WuJiangxi Han, Hui, Miao Gan (Chinese dialects)Jilin Han, Korean, Manchu MandarinLiaoning Han, Manchu, Mongol MandarinNingxia Hui, Han, Manchu MandarinQinghai Han, Tibetan, Hui Tibetan, MongolianShaanxi Han, Hui, Manchu MandarinShandong Han, Hui, Manchu MandarinShanghai Han WuShanxi Han, Hui, Mongol MandarinSichuan Han, Yi, Tibetan Mandarin, TibetanTianjin Han, Hui, Korean MandarinTibet Tibetan, Han, Menba TibetanXinjiang Uighur, Han, Kazak Turkish dialects, MongolianYunnan Han, Yi, Bai Mandarin, TibetanZhejiang Han, She, Hui Chinese dialects, Wu
Table 10.4 (Cont’d)
10.3 Spatial diseconomies and China
10.3.1 China’s quest for spatial integration
10.3.2 Multiregional economic cooperation
10.3.3 Trans-province border economic cooperation
Border economic cooperative zone (BECZ)
Participating provinces
Land area (000 sq. km)
Population (million)a
Natural resources
Zhongyuan Association for Economic and Technological Coordination
Shanxi, Hebei,Shandong, Henan
97.3 4.42 Coal, petroleum, agricultural resources
The Yellow River Delta Economic Zone
Shanxi, Shaanxi, Henan
36.6 10.00 Coal, bauxite; copper; hydraulic power
The Huaihai Economic Zone
Jiangsu, Shandong, Henan, Anhui
176.0 100.00 Coal, agricultural resources
The H-H-S-S Border Zone for Economic Cooperation
Hubei, Henan, Sichuan, Shaanxi
153.8 32.91 Petroleum; coal; phosphor; iron ore; natural alkali; crystal; mercury
The S-G-G Border Economic Zone
Shaanxi, Gansu, Sichuan
162.0 22.60 Lead; zinc; petroleum; natural gas; pottery
The F-G-J Border Zone for Economic and Technological Cooperation
Fujian, Guangdong, Jiangxi
74.6 11.39 Coal; manganese; hydraulic power; copper; gold; silver
The Joint Congress for Promotion of Economic Development in the Dabieshan Area
Anhui, Henen, Hubei
123.0 25.69 Biological and agricultural resources
(a): Data as of the 1990s.
Table 10.5 Selected transprovincial border economic cooperative zones in China
Area type2-d border counties 3-d border counties
(1) non-BECZ
(2) BECZ
(2)-(1) (1) non-BECZ
(2) BECZ
(2)-(1)
Plain area 489.79 942.40 452.61 391.61 467.69 76.08
Mountain area
460.07 566.96 106.89 NA 623.01 NA
All 473.79 686.42 212.63 391.61 584.18 192.57Notes: (1) An i-d border county is one which is bordered by i provinces. (2) BECZ= trans-provincial border economic cooperative zone.Source: Guo (1993).
Table 10.6 Average income level (yuan/person) by type of border-region
10.4 Regional development strategies
10.4.1 Historical review
10.4.2 Coastal area development strategy
10.4.3 Western region development strategy
10.4.4 Resurgence of the old industrial base
Period Coastal (%) Inland (%) Coastal/inland
1953–57 (1st FYP) 36.9 46.8 0.788
1958–62 (2nd FYP) 38.4 56.0 0.686
1963–65 34.9 58.3 0.599
1966–70 (3rd FYP) 26.9 64.7 0.416
1971–75 (4th FYP) 35.5 54.4 0.653
1976–80 (5th FYP) 42.2 50.0 0.844
1981–85 (6th FYP) 47.7 46.5 1.026
1986–90 (7th FYP) 51.7 39.9 1.296
1953–78 (pre-reform) 35.7 55.2 0.647
1979–90 (post-reform) 49.9 43.2 1.155
1953–90 45.0 46.8 0.962
Notes: The total investment of coastal and inland areas are less than 100.00% due to the exclusion of the spatially ‘unidentified’ investment which includes (1) the trans-provincial investment in railway, post and telecommunication, electric power, etc.; (2) the unified purchase of airplanes, ships, vehicles, etc.; and (3) the investment in national defense.Sources: (1) SSB (1991, 1992) and (2) Li and Fan (1994, p. 65).
Table 10.7 Spatial distribution of investment, 1953--90
Case study 8
Fighting for rainfalls?
Chapter conclusion:
Despite the mutually complementary conditions between many of its different regions, the Chinese economy has been internally affected by various geographical, administrative and cultural barriers that exist between provincial administrations. Following an empirical analysis of the spatial efficiency of the Chinese economy, this chapter studies the possibilities and conditions under which the Chinese economy can (or cannot) be optimized spatially. We will analyze the negative economic impacts of China’s interprovincial barriers. The result shows that the multiregional complementarities have not been utilized fully and that due to this existing cross-border separation the Chinese economy cannot be spatially optimized. During recent decades, China’s economic reform and open-door policies have developed its provincial and local economies disproportionally. The particular focus of the final part of this chapter will examine China’s various efforts on the search for spatial economic integration.
Suggested readingAlesina, A., E. Spolaore, and R. Wacziarg (2000). “Economic
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Bai, Chong-En, Y. Du, Z. Tao, and S. Y. Tong (2004). “Local protectionism and regional specialization: evidence from China’s industries,” Journal of International Economics, Volume 63, Issue 2, pp. 397–417.
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Du, Julan, Qing He, Oliver M. Rui (2011). “Channels of interprovincial risk sharing in China,” Journal of Comparative Economics, Volume 39, Issue 3, pp. 383-405.
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Li, Z. (1993). “In-Depth Exploration of the Question of Regional Blockades,” Chinese Economic Studies, Volume 26, Issue 5, 23–36.
Magee, Darrin (2008). “Spatial Structure and Regional Development in China: An Interregional Input–Output Approach,” Regional Studies, Volume 42, Issue 10, December, pp. 1401-1403.
Sonobe, Tetsushi, Dinghuan Hu, Keijiro Otsuka (2006). “Industrial development in the inland region of China: A case study of the motorcycle industry,” Journal of Comparative Economics, Volume 34, Issue 4, pp. 818-838.
Tong, Yanqi (2007). “Bureaucracy Meets the Environment: Elite Perceptions in Six Chinese Cities,” The China Quarterly, Volume 189, pp. 100 - 121.
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Suggested reading
Yao, S. and Z. Zhang (2001). “Regional Growth in China under Economic Reforms,” Journal of Development Economics, Volume 38, pp. 16-46.
Yeung, Godfrey (2002). “WTO Accession, the Changing Competitiveness of Foreign-financed Firms and Regional Development in Guangdong of Southern China,” Regional Studies, Volume 36, Issue 6, August, pp. 627-642.
Zhang, Jingxiang and Fulong Wu (2006). “China's changing economic governance: Administrative annexation and the reorganization of local governments in the Yangtze River Delta,” Regional Studies, Volume 40, Issue 1, February, pp. 3-21.
Yuan, Juanwen and Anke Niehof (2011). “Agricultural Technology Extension and Adoption in China: A Case from Kaizuo Township, Guizhou Province,” The China Quarterly, Volume 206, pp. 412 - 425.