Township and Village Enterprises, Openness and Regional Economic Growth in China

Maria Dacosta and Wayne Carroll

Post-Communist Economies, 2001, vol. 13, issue 2, 229-241

Abstract: By most standards China's post-1978 economic reforms have been a colossal success. Much of that success can be attributed to China's encouragement of foreign trade and its shift from state-owned enterprises to more market-oriented institutions such as township and village enterprises (TVEs). This article uses a province-level panel analysis to measure the contribution these reforms have made to China's growth. Like earlier cross-section studies of economic growth rates, the model explains differences in growth rates of per capita income between provinces by using initial endowments, demographic variables and measures of investment in human and physical capital as explanatory variables. Important contributions in this study are its focus on the role of TVEs and foreign trade and its use of time series data from the provinces. The results are consistent with earlier cross-country studies: strong evidence of convergence, a positive role for lagged investment and an insignificant role for human capital investment as measured by school enrolment. China's market-oriented reform has also contributed to its growth: openness has played a positive role and township and village enterprises have been strongly significant.

Date: 2001
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DOI: 10.1080/14631370120052681

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