A Spatial Investigation of ƒÐ-Convergence in China

Abstract

Using techniques of spatial econometrics, this paper investigates ƒÐ-convergence of provincial real per capita gross domestic product (GDP) in China. The empirical evidence concludes that spatial dependence across regions is strong enough to distort the traditional measure of ƒÐ-convergence. This study focuses on the variation of per capita GDP that is dependent on the development processes of neighboring provinces and cities. This refinement of the conditional ƒÐ-convergence model specification allows for analysis of spatial dependence in the mean and variance. The corrected measure of ƒÐ-convergence in China indicates a lower level of dispersion in the economic development process. This implies a smaller divergence in real per capita GDP, although convergence across regions is still a challenging goal to achieve in the 2000s.ƒÐ-Convergence, Moran's index, spatial dependence, spatial lag