Disparity in Factor Contributions between Coastal and Inner Provinces in Post-reform China

The paper discusses China’s post-reform regional economic growth imbalance relative to input disparity in technology, physical and human capital. Institutional sources of finance and types of ownership are used to construct physical capital. Technology is measured by investment in innovation, and human capital is constructed from schooling years per capita. The results show that domestic bank loans and foreign-owned enterprises are important in coastal provinces, while state appropriation and state-owned enterprises are important in inner provinces. Technology and foreign investment have a larger impact on output growth in coastal provinces. Human capital is endogenous for coastal provinces, but is exogenous for inner provinces.