stéphanie carretdevelopment workshop1 globalization and regional income inequality: empirical...
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Stéphanie Carret Development Workshop 1
Globalization and Regional Income Inequality: Empirical evidence from within ChinaPaper by Guanghua Wan, Ming Lu and Zhao Chen
Stéphanie Carret
Faculty of Economic ScienceUniversity of Warsaw
22th October, 2009
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The Planning for today
1. Review of the paper: main ideas2. Analysis of illustrative graphs3. Questions raised?
« Spilled water is difficult to catch »
Chinese Proverb
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China’s geography
3d largest country 9M km2 (Poland,
300000 km2) 4,845 km ENE – WSW 3,350 km SSE – NNW 1.3 billion people in
23 Provinces 5 Autonomous Regions 4 Municipalities 2 Special
Administrative Regions
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Review of the paper: main ideas (1)
The authors examine the heat-debate about the impact of globalization (trade & liberalization) on inequality level Empirical evidence with the case of China, an emergent country
and power Dataset: 29 regions between 1987 and 2001 (excluding HK, TW…)
Economists’ views on globalization impact It increases inequality (Stiglitz) It diminishes inequality (Ben David) No relation with inequality (Sala i Martin) U-shaped pattern for the inequality/trade function (Krugman)
Problematic of the paper: How globalization and regional income inequality is related in
China? How much are they related?
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Review of the paper: main ideas (2)
China’s insertion in globalization in a few facts & figures Deng Xiaoping’s famous « get rich!» message at the end
of the 70’s. « Doesn’t matter if the cat is black or grey; as long as it catches mice »
20 years of opening, largest FDI’s receiver and member of WTO since 2002
In 1994, trade (I/E) was almost completely deregulated From rank 32 to 5 as trader in the world economy
between 1978 and 2002 Chinese international trade in 2006 =$600billion, half of
its GDP Special Eco Zones and Open cities end 70’s: FDI flows
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3 different regions in China: East, Centre and West these regions experience different level in FDI,
income, capital, privatization (see GDPs table)… See Figure 1.1 for FDI and openness levels
Even if unified national policy: different pace of globalization catching Non economical factors: pre-dispositioned
regions (coastal East and South), resources already available for FDI attraction, culture, local/regional governments…
Review of the paper: main ideas (3)
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Inequality at the country’s level
The residual contribution Increase of Gini coeff
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Analysis: What are the contributive factors to
inequality?
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Ranking of contributive factors,
Gini Index
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Conclusion & Questions
Solutions & Problems More public investment in the lagging regions Ease migration to the fast growing regions Institutional innovation to improve the performance of fiscal
decentralization: give fiscal advantages Targeted social protection for the poorest classes Development of financial market accross country:
government’s measures Promote FDI and trade in West and Central regions Ethnical troubles China has to deal constantly with the tackling of
inequalities: SOCIAL PACT The global rank of China in terms of inequality: a
necessity during the emergence?
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Source:
Paper: “Globalization and Regional Income Inequality: Empirical
evidence from within China”,Paper by Guanghua Wan, Ming Lu and Zhao Chen
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Questions?
Thank you.