Clustering, Growth, and Inequality in China

Cheng-Gang Xu, Di Guo, Kun Jiang and Xiyi Yang

No 12543, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This study examines the effects of China’s industrial clusters on its economic growth and urban–rural income inequality. A density-based index (DBI) is developed to capture the unique features of such clusters in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that strong clusters and entrepreneurial clusters substantially enhance economic growth. Moreover, entrepreneurial clusters reduce urban–rural income inequality by increasing the income of rural residents. Identification issues are carefully addressed by deploying an instrumental variable approach.

Keywords: China; Clustering; Geography; Growth and inequality; Institutions (search for similar items in EconPapers)
JEL-codes: D2 H7 O1 R1 R3 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-ent, nep-tra and nep-ure
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