Trade integration and regional inequality: a theoretical framework with empirical implications for China

Yanqing Jiang

Journal of Chinese Economic and Business Studies, 2016, vol. 14, issue 4, 365-384

Abstract: In this paper we present a theoretical framework for studying integration and inequality in China, followed by some empirical discussions of the Chinese regions. Employing the inframarginal methodology, we set up a theoretical framework based on transaction efficiency and comparative advantage in order to explain integration and inequality in developing economies. Our analyses imply that, among other findings, increases in domestic transaction efficiencies tend to reduce welfare inequalities in a developing economy while increases in international transaction efficiencies tend to raise the overall welfare level of a developing economy. These and other related results of this paper may have important implications for developing countries (China) in their policy-making.

Date: 2016
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DOI: 10.1080/14765284.2016.1208398

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