Showing papers in "Economics of Planning in 1998"
TL;DR: In this paper, the authors assess the determinants of Foreign Direct Investment (FDI) in China and its effects on the whole economy and conclude that FDI affects China's growth through the diffusion of ideas.
Abstract: This paper attempts to assess the determinants of Foreign Direct Investment (FDI) in China and its effects on the whole economy. After presenting the main theoretical contributions and the previous works done about China’s inward-FDI, an empirical study has been implemented extending the previous ones with a different data set (more recent) and with different methodologies. The traditional determinants of FDI seem to be relevant for China: domestic market size, cost advantages and openness to the rest of the world. Concerning the consequences of FDI on the Chinese economy, our empirical evidence supports the view that FDI affects China’s growth through the diffusion of ideas. Through the introduction of new ideas, multinational firms develop technical progress and hence long-run economic growth. The transmission of ideas seems to have had a positive effect on the Chinese growth.
251 citations
TL;DR: The authors examined the extent to which the growth process in this country can be explained by the augmented Solow-Swan model and found that in spite of restrictive assumptions used, the model provides a fairly good description of cross-sectional data.
Abstract: There has been renewed empirical work recently on testing the neoclassical model of economic growth using data on various groups of countries. But none of the cross-country regressions includes China, the largest developing economy in the world. This study utilises both cross-sectional and panel data on provinces of China over the reform period 1978–1995 to examine the extent to which the growth process in this country can be explained by the augmented Solow-Swan model. We found that in spite of restrictive assumptions used, the model provides a fairly good description of cross-sectional data. The levels and growth rates of GDP per capita are shown to be higher in regional economies with lower population growth, greater openness to foreign countries and more investment in physical and human capital. In addition, regional economies are shown to converge both conditionally and unconditionally over the reform period. However, the quantitative implications of the augmented Solow-Swan model are not borne out in panel data.
75 citations
TL;DR: In this article, a multi-angle approach was adopted to fully understand income inequality in China, where the authors first use some top-down information to form a general picture of inequality for the whole country, and then use some bottom-up household survey data to explain in detail the development of inequality over time regarding rural/urban inequality, rural inequality, urban inequality and inter-regional inequality, the relative importance of different income sources to overall inequality.
Abstract: Economic reforms have brought about spectacular growth and vast improvements of people’s living standards in China since 1978. In the meantime, unbalanced regional growth and income inequality have become two important concerns of future development. Most available studies on income distribution have either focused on the rural population or on the urban citizens. This paper stresses the importance of adopting a multi-angle approach to fully understand income inequality in China. We first use some top-down information to form a general picture of inequality for the whole country, and then use some bottom-up household survey data to explain in detail the development of inequality over time regarding rural/urban inequality, rural inequality, urban inequality and inter-regional inequality, the relative importance of different income sources to overall inequality.
26 citations
TL;DR: In this article, the principal-agent relationship and its associated monitoring-incentive problems of the public economy were modeled and the basic findings were: (1) the degree of publicness and the size of public economy matter; (2) a corrupt public economy can be a Pareto-improvement over the non-corrupt public economy.
Abstract: This paper is intended to model the principal-agent relationship and its associated monitoring-incentive problems of the public economy. The basic findings are: (1) the degree of publicness and the size of the public economy matter: the monitoring effort of the original principals and the work effort of the ultimate agents decrease with the degree of publicness and the size of the public economy; (2) a corrupt public economy can be a Pareto-improvement over the non-corrupt public economy. The first finding sheds some light upon performance comparison between different public economies (such as between Singapore and China). The second finding explains why all socialist economies are corrupt ones. The paper applies the above results particularly to the Chinese economy.
25 citations
TL;DR: In this article, the authors provide an overview of the Greek Community Support Framework (CSF) and an ex ante assessment of the effects that the Second CSF is likely to have on the economy of Greece.
Abstract: The Greek Community Support Framework (CSF), which is operational during the period 1994-99, is designed to finance large-scale development projects and investment in physical and human capital in Greece, aiming to gear the economy onto a sustainable path of economic growth and development. This process of real convergence is viewed as a prerequisite for the cohesion of EU and the sustainability of the nominal convergence objective of the Maastricht Treaty in the way to Economic and Monetary Union of Europe. The paper provides, first, an overview of the Greek CSF and, second, an ex ante assessment of the effects that the Second CSF is likely to have on the economy of Greece. The analysis delineates four types of CSF actions according to whether they aim at (i) raising 'hard' infrastructure, (ii) financing 'soft' infrastructure interventions (such as R&D, health services, etc), (iii) supporting productive investment, and, (iv) training the labour force into new skills and improving the civil service. The effects are analysed first assuming that CSF operates only through raising the components of income and aggregate demand, and then by incorporating externalities on the productivity of output in various sectors and the reduction in costs. We find that in the absence of externalities, output rises during the period of the CSF 1994-99 but then returns to the benchmark course without any lasting improvement. When all types of externalities are taken into account, total output in year 2010 will be higher than baseline by an impressive 9.5%, and will continue to grow at a rate faster by 0.26% per annum than would be otherwise, while employment expands by an average of 95.000 new jobs.
16 citations
TL;DR: In this paper, the authors estimate hedonic price functions based on a unique data set on auction prices of apartments in Moscow and find that the prices fit the data remarkably well.
Abstract: The purpose of this paper is to see how economic factors determine prices in the previously communist countries undergoing privatization. This does not concern the auctions of big state enterprises where the prices are found to be rigged. In this paper we estimate hedonic price functions based on a unique data set on auction prices of apartments in Moscow. We collected the data ourselves by attending the auctions and gathered data on the characteristics. We estimated the hedonic equations using a disequilibrium approach because no equilibrium prices were observed for large number of apartments that were withdrawn from the auction. We found that, as the privatization of residential housing was carried out, the hedonic price equations fit the data remarkably well.
12 citations
TL;DR: In this article, the authors examined the sources of structural changes in output growth of China's economy over 1987-92 using a decomposition method within the input-output (IO) framework.
Abstract: This paper examines the sources of structural changes in output growth of China’s economy over 1987–92 using a decomposition method within the input-output (IO) framework. The model uses three comparable IO tables of 1987, 1990, and 1992 as the main data sources; it accounts for output changes from a demand side perspective and decomposes the growth of output into consumption demand, investment demand, export, import, and intermediate use (indicated by changes in IO coefficients). Special attention is given to identifying the effects of government policies on economic growth and structural change. It is found that overall output growth was multi-components driven rather than single-factor led; the share of the contribution to output growth from consumption and investment expansion declined and that from export and import increased. Whilst the efficiency of factor utilisation remains an issue of further research, a remarkable rise in IO coefficient share indicates a deepening and strong interdependence between industrial sectors over the data period.
12 citations
TL;DR: In this paper, the authors argue that the sustainable development of Chinese agriculture is constrained by the continuing adverse effects of the policy of industrialisation, which has resulted in an excessive loss of capital from the agricultural to the industrial sector, a loss of strategic natural resources and infrastructure from agriculture and severe environmental degradation associated directly and indirectly with the development of industry.
Abstract: The paper argues that the sustainable development of Chinese agriculture is constrained by the continuing adverse effects of the policy of industrialisation. This has resulted principally in an excessive loss of capital from the agricultural to the industrial sector, a loss of strategic natural resources and infrastructure from agriculture and severe environmental degradation associated directly and indirectly with the development of industry. Quantitative links are established between changes in the growth of grain production and the progress of industrialisation in the pre and post reform eras. It is argued that a fundamental adjustment to the relationship between industry and agriculture is needed and that a more favourable socio-economic environment will be required if China is to develop a sustainable agricultural sector within the context of a national autarky objective in the grain sector.
10 citations
TL;DR: In this paper, the authors explored the contributions of exports and FDI to growth and economic liberalization in China and lndia, and examined the role of FDI, and its sources and composition by sector, industry, and by overseas ethnic Chinese and Indians.
Abstract: Two major factors account for a country’s growing integration with the global economy: trade and foreign investment; expansion of exports, and foreign direct investment (FDI). Growth of exports became a dominant source of industrial growth during the 1980s in most developing countries (see Helleiner, 1995). Most of these countries including China and India, have replaced the old import-substitution policy by an export promotion strategy. Both domestic and international factors played an important role in the shift of national policies to repay debts. The process of globalization already underway necessitated export orientation for improving technology, management practices, marketing and international competitiveness. This paper aims at exploring the contributions of exports and FDI to growth and economic liberalization in China and lndia. The first section briefly reviews similarities and differences in the two economies. The second section deals with growth, composition and direction of foreign trade. The third section examines the role of FDI, and its sources and composition by sector, industry, and by overseas ethnic Chinese and Indians. Trade and FDI linkages are examined in the fourth section which also contains a brief case study of Guangdong (China).
9 citations
TL;DR: In this paper, the authors investigated the dynamic structure of a standard disequilibrium model and found that it is the exogenous variables rather than the price adjustment process that form the real adjustment force of the model.
Abstract: This paper investigates the dynamic structure of a standard disequilibrium model. By assuming that the model variables are non-stationary time series with respect to ample empirical evidence, we find the following: 1) It is the exogenous variables rather than the price adjustment process that form the real adjustment force of the model; 2) Quantity disequilibrium and price disequilibrium are isomeric in the model, and follow a weakly stationary process when all the variables areI (1) nonstationary; 3) The disequilibrium process has a none-zero mean when the weakly exogenous variables of the demand equation do not cointegrate with those of the supply equation, corresponding to certain 'chronic disequilibrium' phenomena; 4) The isomerism between quantity disequilibrium and price changes makes it unnecessary to lean on the 'min condition' to characterise disequilibrium.
8 citations
TL;DR: In this paper, a multivariate extension of the endogenous break univariate approach is proposed to test for cointegration in the presence of possible structural breaking cointegrated relationships under the alternative.
Abstract: In previous studies concerning short and long run relationships for price-wage models, the cointegration analysis has been developed assuming the existence of a unique cointegration parametrisation. These empirical results reveal the presence of significant relationships, both in the short and in the long run, among prices, wages, labour productivity and exchange rate. In this paper we intend to develop the possibility of a more general type of cointegration, allowing for a change at an unknown time period in the sample. At this end we will consider mainly the long run relationship among these variables using the testing procedure suggested by Gregory and Hansen (1996a, 1996b). This permits us to consider a multivariate extension of the endogenous break univariate approach and in the meanwhile this enables to test for cointegration in the presence of possible structural breaking cointegrated relationships under the alternative. The empirical analysis of a multivariate model for price-wage relationship both for Poland and Hungary, over the period 1970-1996, is presented and discussed.
TL;DR: In this article, the authors consider the way in which the system of local government finance in China affects the design of local industrial policy and present a theoretical model which shows how the financing system can lead local governments to distort local industrial structure.
Abstract: The paper considers the way in which the system of local government finance in China affects the design of local industrial policy. It starts by using recently collected data from selected cities to demonstrate the importance of indirect taxes for financing local services. It then presents a theoretical model which shows how the financing system can lead local governments to distort local industrial structure. Finally, it uses this model to consider whether the 1994 tax reforms can be expected to reduce these distortions.