Search

This paper integrates trade policy and foreign direct investment into a unified analytical framework, and investigates the effects of input trade liberalization on the entry of foreign firms. To identify the causal effects, we utilize China's accession to the WTO in 2001 as a quasi-natural experiment, and perform difference-in-difference estimation. The results show that input trade liberalization significantly increases foreign entry. We also find that input trade liberalization not only promotes the entry of new foreign firms, but also restrains the exit of existing foreign firms, thereby contributing to the net growth of the number of foreign firms. The mechanism tests show that increasing variety as well as quality of intermediate input and reduction in marginal cost are the potential channels through which input trade liberalization promotes foreign entry. This paper further demonstrates that institutional environment strengths the positive effect of input trade liberalization on foreign entry, and the promotive effect of input trade liberalization on foreign entry increases with industry import intensity, additionally, input trade liberalization is also conducive to improving the quality of foreign investment. [ABSTRACT FROM AUTHOR]

Rapid economic growth in China with considerable market intervention has led to renewed interest in the efficacy of industrial policy. Have industrial policies helped Chinese firms overcome market failures and boosted productivity, or have they distorted markets and undermined creative destruction? This paper explores these questions in the specific context of local implementation by studying the targeting of financial favors and the relationship of such targeting to local political incentives. Using unique and largely unexplored quasi-census firm-level data from annual tax surveys in China from 2007 to 2015, this paper demonstrates that financial favors disproportionately target loss-making, larger, older, and less productive firms. It then argues that short-term career incentives facing local officials explain this sub-optimal targeting, showing that promotion likelihood for city leaders increases with higher levels of 'excess' financial favors to firms, particularly when these favors are provided to loss-making firms. Finally, the paper estimates costs to the Chinese economy from misallocated financial support by showing that financial favors are associated with lower levels of firm entry and lower productivity growth. The paper contributes to the literature on industrial policy, political incentives, and misallocation, and has important implications for China's future growth and transition. [ABSTRACT FROM AUTHOR]

Digital finance has changed the landscape of financial service provision worldwide. China in particular, with a booming fintech sector and large numbers of users, is at the forefront of the expansion of digital financial services. As such, the country has become an important case for better understanding how fintech operates and what its expansion entails for socioeconomic development. This paper focuses on the provision of new models of digital finance in rural China by two Internet giants – JD and Alibaba. Against the backdrop of decades of generally unsuccessful attempts to expand financial coverage in rural areas by conventional bricks-and-mortar financial institutions, these two rural fintech models have the potential to expand digital financial service provision in new ways. This paper critically examines these fintech models, contextualises them within the broader trajectory of pushes to expand digital financial inclusion worldwide, considers the parallels with agricultural supplier contracting systems elsewhere, and explores the potential benefits and risks that they pose for rural development and rural livelihoods in China and elsewhere. [ABSTRACT FROM AUTHOR]

Land reform has been perceived to be a major avenue for poverty reduction, amid controversies regarding the impacts of land reform in developing economies. This paper demonstrates how China's land reform in the 1950s succeeded in reducing hunger and poverty. To be more specific, our paper constructs a theoretical model, deriving hypotheses with respect to the welfare effects of land reform in general. The hypotheses are then empirically tested using a unique data set from China. Our identification strategy of combining propensity score matching (PSM) with Differences-in-Differences (DID) estimations ensures the reliability of causal inferences and analytical results. The paper concludes that China's land reform in the 1950s significantly improved the welfare of peasants in terms of subsistence living while its effect on non-subsistence welfare was insignificant. [ABSTRACT FROM AUTHOR]

Against the backdrop of frequent international trade frictions, reducing external risks in export trade through industrial policies has become crucial for China's high-quality and steady foreign trade development. This paper examines the impact of development zone upgrading policies on the diversification of firm product exports by using a time-varying difference-in-differences model. We find that after the upgrading of development zones, the diversification of firm product exports increases by 2.13%, and concentration decreases by 1.33%. Moreover, this policy has a stronger impact on the diversification level of product exports for firms upgraded to customs special supervision areas, located inland, and engaged in general trade. These conclusions remain robust even after conducting additional robustness tests using alternative measures of the dependent variable, different identification methods for development zone upgrading, and controlling for other industrial policy effects. Furthermore, the upgrading of development zones improves export diversification through three main channels: enhancing firm innovation capabilities, optimizing management efficiency, and providing financial support to firms. [ABSTRACT FROM AUTHOR]

This paper studies how rural-urban migration in China affects the vertical disintegration of firms. We construct a theoretical model and find that the inflow of rural migrants increases the output of firms in urban areas. This leads to a higher degree of vertical disintegration of firms due to the decreasing returns to scale. We also find that the wage of skilled workers relative to that of unskilled workers in urban areas is increased with rural migrants as the vast majority of rural migrants are unskilled. Our empirical findings are consistent with our model predictions using China's population census and manufacturing firm-level data in 2005. [ABSTRACT FROM AUTHOR]

In this paper, we evaluate how supply shocks in global value chains, such as the lockdown in China during the coronavirus pandemic, affected firm-product-level export performance in Bangladesh, which is a least-developed country where domestic inputs are inadequate due to capacity constraints. Transaction-level customs data on the universe of Bangladeshi apparel manufacturing firms are used in the analysis. We apply a triple difference-in-differences approach to compare the woven apparel exports of the firms that relied on China for inputs before and after the lockdown with those of knit apparel and firms that depended on the rest of the world as a comparison group. The results show that firms exposed to the Chinese input supply shock experienced a 36.5% decline in woven apparel exports after the lockdown. A plausible explanation for the decline in exports is the reduced shipment size driven by the constrained production capacity due to the shortage of inputs from China. We also find that exposed firms whose exports were highly concentrated in the European Union and the United States incurred an additional 18% decline compared to other firms. [ABSTRACT FROM AUTHOR]

This paper provides a composite analysis of children's academic development grounded on the capability approach. The study utilises a panel dataset comprising 8,422 Chinese children and adolescents aged 6 to 16, observed between 2012 and 2018. It introduces a series of innovative indicators, including a parent advantage index to capture how parents influence their children and a ranking indicator for spending priorities to reify the value of children's education that families have reasoned. To address unobserved heterogeneity, we adopted fixed-effects models, multilevel modelling, and heteroskedasticity-based instrumental variables. Our primary results show that a 1% increase in the parent advantage index yields an increase of 13.85% to 21.31% in children's academic development, and the biggest leap in prioritising education-relevant spending increases the child outcomes by 2.88% to 6.57%. By highlighting the influence of parents' beings and doings, particularly the value they assign to education, this research contributes to the existing literature on child development, which often focuses predominantly on material dimensions. In sum, it expands the frontiers of the capability approach and related research on parental practices. It offers novel insights into how policies can be reinforced to equalise educational opportunities and to boost human capital. [ABSTRACT FROM AUTHOR]

This paper studies the effect of rural taxation on Chinese peasants' mobility towards urban areas. We find that the tax alleviation due to the tax-for-fee reform significantly reduces rural-to-urban migration, with a 10% decline in tax leading to a 10% reduction in migration. We provide compelling evidence that the result is not driven by unintended policy effects of the tax-for-fee reform in fostering rural non-agricultural job opportunities. The effect of taxation is more pronounced and precisely estimated on migration across provinces or at older ages. To the best of our knowledge this is the first study to identify the tax-induced migration among low-skilled and low-income laborers. [ABSTRACT FROM AUTHOR]

This study uses the Becker's (1957) taste-based discrimination model to analyse the effects of import penetration from China and from the Rest of the World (ROW) on the share of female workers and on the male-female wage gap in the manufacturing sector of Brazil. Using 2000-2012 data from the Brazilian Censuses and Pesquisa Nacional por Amostra de Domicílios, this paper finds no effect of the industry-level exports share on these outcomes. The Chinese import penetration increased the female share and narrowed the male-female wage gap except for college educated workers. The ROW import penetration raised the female share among workers with college degrees, but widened the wage gap except for those with college degrees. These effects were modified with the implementation of the Nova Matriz Econômica (NME) policy in 2008. During the post-NME regime, Chinese import penetration reduced the female share across all workers' groups, while the negative effects of ROW increased on the female share of all groups and on the wage gap in the unskilled-labour intensive industries except for the workers with college degrees. Hence, the effects of the heightened trade-induced competition on workers' discrimination depends on the type and source of imports, the education of workers, and the domestic policies, specifically on wages and sectoral subsidies. [ABSTRACT FROM AUTHOR]

It is well established that son preference is the crucial driver for sex ratio imbalance, and that there are risks stemming from such imbalance. Whether risks associated with a gender-imbalanced society may alter son preference will be explored in this study, which has so far received scant scholarly attention. Using data from the Consequences of Gender Imbalance Survey conducted in 2018, exploiting structural equation modelling, this paper shows that risk perception of gender imbalance has a significant and negative effect on stated son preference; however, entrenched traditional norms underpinning the institution of son preference, measured as gender role attitudes and the value of sons, are reinforced by risk perception. The effect of risk perception on weakening stated son preference is suppressed by gender role attitudes and the value of sons which are still upholding stated son preference. Overall, the effects of risk perception and social norms are additive, influencing stated son preference simultaneously, but traditional norms act as counteracting forces. This study makes an important step toward shedding light on both continuity and change in son preference in gender-imbalanced rural China, and offers new perspectives for future research. [ABSTRACT FROM AUTHOR]

This paper constructs long-run estimates of total missing women (including missing girls at birth and excess female deaths) in China and India over seven decades from 1950 to 2020. We find that the number of missing women in India has been higher than in China throughout the seven decades. Over time, missing girls at birth grew faster in China than in India, but China has made more rapid progress in reducing excess female deaths after birth. While the share of missing girls at birth in total missing women has risen since the 1980s, there has also been a shift in excess female mortality from younger to older age groups. Our estimated trends are consistent with key economic, social, demographic and technological events and developments in the two countries. [ABSTRACT FROM AUTHOR]

The global economy is experiencing digital transformation with impacts felt in developing countries. Digital firms and capabilities, however, remain concentrated in advanced economies. These processes indicate an emerging source of global economic inequality and a widening of the technological gap. Recently, there has been a growth in interventionist digital policy in developing and emerging economies but research has so far made a limited analysis of how this might fulfil economic objectives and support technological catch-up. In this paper, we examine this growth of national digital policies and highlight how industrial policy objectives are important drivers of digital strategies. Examining a number of cases based on an extensive analysis of national digital policies, with a focus on China, we illustrate that these policies often aim at facilitating global integration and linkages. However, our analysis shows that, under certain conditions, more interventionist approaches can be vital in countering structural challenges. Challenges include the power of digital platforms, limitations of domestic digital firms, and limited ability to leverage digitalisation for broad-based national development. [ABSTRACT FROM AUTHOR]

The current era of globalisation has been accompanied by China's rise as a major economic actor. Chinese firms are expanding their presence globally and are seeking to 'catch-up' with firms in developed countries across different sectors. This paper uses China's agricultural machinery sector as a vehicle to examine the challenges faced by firms from developing countries in their effort to catch-up with 'core firms'. Chinese firms operating in the sector struggle to compete with a small number of dominant core firms based in developed countries. These core firms are sectoral leaders with a global presence. They are continuously strengthening their competitive advantage using diverse strategies, including: investing in R&D, focused acquisitions and developing relationships with actors internal and external to agriculture. The challenge of catching-up for Chinese firms in the sector has further increased as developed countries seek to protect firms in strategic sectors like agriculture. By examining the changing nature of the agricultural machinery sector, and the role of core firms, the paper highlights the substantial barriers facing Chinese firms in their efforts to catch-up. This paper has important implications, as it shows that even if firms from developing countries enjoy state-support, they will increasingly struggle to catch-up. [ABSTRACT FROM AUTHOR]

The theory of fiscal and regulatory competition between jurisdictions is more advanced than its empirical testing. This is particularly true of labour regulation in general, and minimum wage regulation in particular, and especially so for developing countries. This paper utilises the spatial lag methodology to study city-level strategic interactions in setting and enforcing minimum wage standards during 2004–2012 in China. We manually collect a panel data set of city-level minimum wage standards from China's government websites. This analysis finds strong evidence of spatial interdependence in minimum wage standards and enforcement among main cities in China. If other cities decrease minimum wage standards by 1 RMB, the host city will decrease its standard by about 0.7–3.2 RMB. If the violation rate in other cities increases by 1 per cent, the host city will respond by an increase of roughly 0.4–1.0 percentage points. The results are robust to using three estimation methods, Maximum Likelihood, IV/GMM, and a dynamic panel data model. Our findings of strategic interactions suggest the need for policy coordination in labour regulation in China. [ABSTRACT FROM AUTHOR]

What explains failures of large-scale anti-corruption campaigns in reducing corruption? Theories on developing country corruption see corruption as either a problem of weak formal institutions that incentivize naturally opportunistic actors or as remnants of traditional behaviors that persist despite changing modern state boundaries and regulations. Neither helps explain how participants continuously strategize to reframe and articulate the morality of those questionable transactions. This paper, through multi-year fieldwork and 34 interviews with business elites in China's Guangdong province, examines how officials and businesses reconfigured their strategies of corruption during a recent anti-corruption campaign. We find that key actors engaged in 'moral articulation' – devising moral repertoires and realigning common exchange practices to accepted meaning frames to safeguard interests and obfuscate their activities. In doing so, they challenged some aspects of state-initiated definitions of corruption while embracing others. Rather than eliciting conformity, the campaign prompted new ingenious action frames that helped internally justify corruption and allowed questionable exchange practices to continue on. [ABSTRACT FROM AUTHOR]

This paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country's two largest Free Trade Agreements (FTA) (with the USA and China). Exploiting cross-industry variation in import exposure, we analyse the effects on manufacturing sales, employment and labour productivity at the finest level of industrial classification (4 digit ISIC level). We detect an overall negative effect of increased Chinese import penetration, owing to substitution effects from low and medium tech imports and a less pronounced effect from USA imports. By introducing interaction effects, we find that the levels of foreign ownership and the export intensity of the domestic industries reverse the negative effect due to the opportunities offered via participation in global value chains. An IV strategy is applied to address standard endogeneity concerns and confirm the robustness of our estimates. [ABSTRACT FROM AUTHOR]

Based on data from the Chinese Household Income Project (CHIP) and the recently extended 'relative distribution' method, this paper analyses the long-term evolution of income polarisation in China from 1995 to 2018 and identifies some of the drivers of the observed changes in polarisation during these years. The results show that although income inequality in China continued to expand from 1995 to 2018, income polarisation experienced a historic reversal, as it decreased significantly between 2013 and 2018 due to decreases in polarisation in both the lower and upper tails of the distribution. Among the factors driving these changes, endowment factors such as urbanisation and increased educational attainment are identified as the sources of declining polarisation at the bottom of the distribution, whereas declining returns to education and employment are the main reasons for the reduced polarisation at the top. Additionally, the polarisation between urban and rural areas significantly decreased from 2013 to 2018, while the middle class also expanded apparently, thus contributing to the historic decline in overall polarisation during these years. [ABSTRACT FROM AUTHOR]

With an under-developed financial market, borrowing from relatives becomes an important funding source in starting one's own business in China. This paper examines the positive effect of number of siblings on entrepreneurship, using the policy shock of China's One-Child Policy as the source of identification. We further show that a person tends to borrow more and save less if he/she has more siblings. We also find that siblings serve as a substitute to formal financial institutions, and that parents do not replace siblings as credit providers after the decline of number of siblings. This additional evidence supports our argument on the credit constraints channel. [ABSTRACT FROM AUTHOR]

We investigate the impact of educational fee reduction reform on children’s school enrolment in rural China. Using data from Gansu Survey of Children and Families, we find that the reform did not have significant impacts on school enrolment of 9–12 year old children, while the reform had significant impacts on school enrolment of 13–16 year old children. We also find that for children enrolled in 2004, the higher are the fee reductions, the higher is the probability for them to stay in school in 2007. Heterogeneous effects in terms of different characteristics are also found in this paper. [ABSTRACT FROM AUTHOR]

In China, numerous policy interventions have been undertaken to promote exports of the manufacturing industry. In this paper, we study how the burgeoning export sector has affected the performance of the manufacturing industry. In particular, we focus our attention on two dimensions: efficiency and technological advancement, and the presence of spillovers and path dependences. The main feature of our empirical study is to distinguish between different types of firms according to their output orientation, ownership, and technology intensity. We also recognize that outputs for domestic use and exports may be produced using different technologies. Our results demonstrate the superiority of multi-output firms in both efficiency and technological advancement. Further, these firms generate strong outgoing spillovers to the industry. In contrast, export-only firms are found to be the most inefficient and technologically underdeveloped, while barely generating outgoing spillovers. In terms of efficiency and technological advancement, we also find that foreign- and privately-owned firms and high-tech firms are the best performers. Finally, we find evidence of strong path dependence and weak absorptive capacities for incoming spillovers in the manufacturing industry. We give targeted policy recommendations based on these findings. [ABSTRACT FROM AUTHOR]

Previous studies investigating the health consequences of migration often face difficulties choosing a proper comparison group and tackling the problems of potential endogeneity and self-selection bias. Using propensity score matching difference-in-differences and an instrumental variable approach, this paper examines the impact of internal migration on the health of rural migrants in China. We find robust evidence of a significant negative effect of internal migration on rural migrants' health. We also find significant heterogeneity in the impact across different age groups. Younger migrants aged between 16 and 35 are most likely to experience health decline following migration. In addition, we find that the key mechanisms through which internal migration affects the health of rural migrants are the changes in emotional state and social trust. [ABSTRACT FROM AUTHOR]

As Vietnam crossed the World Bank's threshold from 'low income' to 'lower middle-income' in 2010 the government and aid donors started to speak about 'the middle-income trap' as a central problem; and to frame 'science and technology (S&T) policy' as a means of sustaining economic growth and thereby avoiding the trap. They identified China and its S&T policy as a model, and pointed to Intel's $1 billion facility as evidence of a burgeoning technology hub. Yet in the years that followed, Vietnam's S&T policy has limped along, with efforts simply to boost the number of Silicon Valley-styled start-ups rather than to pursue a 'Made in China 2025'-like programme. This paper reveals two main reasons. First, the Ministry of Science and Technology is a weak ministry with little budget, unable to persuade other ministries to cooperate in more ambitious and capital-intensive strategies. Second, excitement around S&T policies was fuelled by an influx of high-tech Vietnamese returning home after the 2008 Global Financial Crisis, lending support for building start-up ecosystems. These mechanisms are reinforced by Western aid agencies' support for this narrow S&T policy conception. Findings are based on policy documents and interviews conducted with S&T policy-makers, aid donor staff, and start-up investors between 2012 and 2018. [ABSTRACT FROM AUTHOR]

Social pensions are important cash transfers to the elderly and their families. The pensions may not only affect the wellbeing of the direct recipients, but also have household and intergenerational spillover effects. Using the 2012 and 2014 waves of the China Family Panel Studies (CFPS) data, this paper examines the effect of the New Rural Pension Scheme (NRPS) and its mechanisms on child health in rural China. Our study shows a significant association between the NRPS and the health status of children up to 15 years of age. Moreover, the association of the NRPS with health is larger for children who are boys, 'left behind', six to 10 years of age, and in poor health. In addition, we investigate possible mechanisms of the effect, including health consciousness of the caregiver, household sanitation conditions, and high-protein food consumption, and find the increase of child nutrition intake is the main channel through which the NRPS affects child health. [ABSTRACT FROM AUTHOR]

Anaemia is a factor that could affect health and school performance of students and shed a shadow on poverty in the long-run, particularly in rural China. In response, the current literature mainly pays attention to the effect of direct payments such as money and food. Although some literature indicates that a key to children's nutritional improvement is to increase their parents' nutrition knowledge, it has not been well studied. The main purpose of this paper is to test whether nutrition knowledge training for parents can significantly decrease anaemia in their children. This article uses a randomised control trial of information intervention for parents of more than 2000 fourth and fifth grade students in 42 randomly selected rural primary schools in northwest China and confirms that parental nutrition knowledge training has a positive effect on students' haemoglobin level, through the channel of knowledge improvement and dietary change. Specifically, the programme could reduce children's anaemia by 6.1 per cent in probability, and increase haemoglobin values by 2.8 on average. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the Hoa, an ethnically Chinese, economically dominant minority, on regional economic development in Vietnam. To address the endogeneity of the geographical distribution of the Hoa, we use an important historical episode: the rapid deterioration in Sino-Vietnamese diplomatic relationship that led many ethnic Chinese to flee abroad, particularly to the refugee camps in the Guangxi province of China, in 1979. We find that the effects of proximity to the refugee camps on the share of ethnic Chinese in 1989 were more pronounced for provinces that had a larger presence of the ethnic Chinese population in 1979. We also find strong correlations between the 1989 share of ethnic Chinese (instrumented) and contemporary indicators of economic performance. The results suggest that the ethnic Chinese minority had positive economic impacts on Vietnam’s regional economies and that the post-Vietnam War exodus of ethnic Chinese was likely to have had long-term negative economic impacts. [ABSTRACT FROM AUTHOR]

China's rapid urbanisation has induced large numbers of rural residents to migrate from their homes in the countryside to urban areas in search of higher wages. As a consequence, it is estimated that more than 60 million children in rural China are left behind and live with relatives, typically their paternal grandparents. These children are called Left Behind Children (LBCs). There are concerns about the potential negative effects of parental migration on the academic performance of the LBCs that could be due to the absence of parental care. However, it might also be that when a child's parents work away from home, their remittances can increase the household's income and provide more resources and that this can lead to better academic performance. Hence, the net impact of out-migration on the academic performance of LBCs is unclear. This paper examines changes in academic performance before and after the parents of students out-migrate. We draw on a panel dataset collected by the authors of more than 13,000 students at 130 rural primary schools in ethnic minority areas of rural China. Using difference-in-differences and propensity score matching approaches, our results indicate that parental migration has significant, positive impacts on the academic performance of LBCs (which we measure using standardised English test scores). Heterogeneous analysis using our data demonstrates that the positive impact on LBCs is greater for poorer performing students. [ABSTRACT FROM AUTHOR]

This study is a first attempt to estimate the impact of school resources on students' subsequent labour market earnings in China. Combining unprecedented school data from the early 1950s to the 1990s with household survey data in the 2000s, this paper documents that expenditure-per-pupil, a proxy measure of school resources (or quality) has a significant impact on the level of subsequent earnings through its influence on education returns. The positive effect calls for policy intervention aimed at improving education, to be based on the perceived economic return to the quantity as well as the quality components of education. [ABSTRACT FROM AUTHOR]

The objective of this paper is to examine the treatment effect on farm household productivity induced by the Sloping Land Conversion Program. Using large balanced household level data from five provinces during 1996-2010, this study shows that the SLCP significantly improved the productivity of participants during the first round of funding of the programme until 2008, while the effects decreased gradually in the second round with most years not showing significant differences. Moreover, it is found that there are heterogeneous effects on farm household productivity between the south and north, as well as between poor and rich regions. [ABSTRACT FROM AUTHOR]

Rural residents in China today face at least two key decisions: a) where to live and work; and b) where to send their children to school. In this paper we study the second decision: should a rural parent send their child to a public rural school or have him or her attend a private migrant school in the city. While there is an existing literature on the impact of this decision on student academic performance, one of the main shortcomings of current studies is that the data that are used to analyse this issue are not fully comparable. To fill the gap, we collected data on the educational performance of both migrant students who were born in and come from specific source communities (prefecture) in rural China and students who are in rural public schools in the same source communities. Specifically, the dataset facilitates our effort to measure and identity the academic gap between the students in private migrant schools in Shanghai and Suzhou and those in the public rural schools in Anhui. We also seek to identify different sources of the gap, including selection effects and observable school quality effects. According to the results of the analysis, there is a large gap. Students in public rural schools outperform students in private migrant schools by more than one standard deviation (SD). We found that selection effects only account for a small part of this gap. Both school facility effects and teacher effects explain the achievement gap of the students from the two types of schools, although these effects occur in opposite directions. [ABSTRACT FROM PUBLISHER]

A key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influence the allocation of public resources. In this paper we utilise a unique set of survey data set from nearly 2450 randomly selected villages describing China's recent progress in village governance reforms and its relationship to the provision of public goods in rural China between 1998 and 2004. Two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures. The empirical analysis - both in the descriptive and econometric analyses - suggests that when the village leader is elected directly, ceteris paribus, the provision of public goods rises (compared to when the leader is not elected directly by villagers). Thus, in this way it is possible to conclude that democratisation - at least at the village level in rural China - appears to increase the quantity of public goods investment. Second, we seek to understand the mechanism that is driving the results. Also based on the survey data, we find that when village leaders (who had been directly elected) were able to implement more public projects during their terms of office, they, as the incumbent, were more likely to be re-elected. In this way, we argue that the link between elections and investment may be a rural China version of pork barrel politics. [ABSTRACT FROM AUTHOR]

This paper analyses the performance of state-owned business groups in China. Group affiliation can be important for economic policy evaluation since the Chinese government promotes the formation of business groups as a first step in the process of reforming state enterprises into modern corporations. The analysis applies a range of econometric techniques to a sample of 657 Chinese state-owned firms in 2005 and shows that group affiliation has a robust positive effect on performance. Group affiliation may in this respect provide a successful alternative to large-scale privatisation. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of household saving in China and India over the last few decades using the life cycle model, with appropriate modifications to account for the expected benefits of pension saving. Consistent with the predictions made in the life cycle model, higher income growth promotes more household saving, and higher age dependency does the opposite. An increase in the inflation rate appears to encourage household saving. Interestingly, the evidence suggests that an increase in expected pension benefits tends to discourage household saving in China in the long run, but the reverse is found in India. [ABSTRACT FROM AUTHOR]

This paper examines the potential role of civic environmental NGOs in China's democratisation. Based on interviews with 31 NGO officials, the paper examines the origins, structures, and functions of civic environmental NGOs in China. It also examines how various political and resource constraints have shaped their development. While having made progress in organising educational campaigns and specific conservation projects, civic environmental NGOs have been less successful in influencing government decisions and official behaviours. Most recently, some NGOs have made limited progress on these fronts by maintaining a largely non-oppositional stance towards government and by utilising various formal and information channels for influencing government decisions. NGO leaders will have to negotiate with different party-state entities in defining their precise roles in the political process. [ABSTRACT FROM AUTHOR]

The quantity-quality trade-off is one important motivation for the family planning policies in many developing countries. In this paper, we examine the effect of number of siblings on children's health and education in China. We find evidence of quantity-quality trade-off in children's health but not in children's education. Our study has three contributions. First, we focus not only on children's education but also on children's health, which has received rather little attention in the literature. Secondly, we use a new source of exogenous variation in fertility - variations of the strictness of the One-Child policy across localities in China - to construct instrumental variable's (IV's). Finally, we empirically explore the underlying mechanism of the quantity-quality trade-off, and find supporting evidence for the resource dilution hypothesis. [ABSTRACT FROM AUTHOR]

Using a unique Chinese survey of parents and adult children, this paper examines how married children negotiate with their spouses for time devoted to caring for their own parents. Applying a collective bargaining framework, I show that the sex ratio at marriage shifts household bargaining in favour of the husband’s parents when women are less scarce, or against his parents when women are scarcer. Such changing dynamics in the family may potentially reverse the current preference for sons in China, implying that those with sons, rather than daughters, may be increasingly in need of state support. [ABSTRACT FROM AUTHOR]

Small Hydropower is regarded by the Chinese state as a method for both poverty alleviation and environmental protection in rural areas. This paper finds that local government officials develop an ‘environmentally bundled economic interests’ approach that simultaneously fulfills the central state’s new political mission and local economic development demand. The small hydropower plants however have paradoxically become the destroyer of the environment as local government at different levels develop the plants in an un-coordinated manner. We use the growth of small hydropower in Yunnan province as an exemplar to show the new tendency and problems of China’s environmental governance. [ABSTRACT FROM PUBLISHER]

Productive transformation from commodity production to higher value added activities is at the heart of the transition from a middle-income to a high income economy. The key is the development of domestic innovation capabilities to move up the value chain on a broad enough basis to generate sustained productivity growth. Since WW II few countries have achieved this transition. Under the market-led strategies of the past 30–40 years, Latin American countries have become trapped at the middle-income level. Informed by a structural-evolutionary approach, I investigate the reasons for the poor productivity performance in the region. I analyse the 'within' and 'across' sector sources of productivity growth in nine Latin American countries over the period 1950–2011, compare it with China's, and link the outcomes to public policy, both with respect to state-led and market-led strategies, and to specific policies aimed at advancing innovation. I argue that the current globalisation process, particularly the rise of China, have shifted the goal posts for middle-income countries and increased the urgency to develop domestic innovation capabilities. [ABSTRACT FROM AUTHOR]

The paper presents subjective well-being functions for urban and rural China, based on a national household survey for 2002. Whereas the vast income disparity between urban and rural households is confirmed, it is found that, remarkably, rural households report higher subjective well-being than do their richer urban counterparts. A decomposition analysis explores the reasons for this reversal. It finds that there are many determinants of happiness other than absolute income, and that the determinants differ in the two sectors. An explanation for the puzzle is advanced in terms of relative concepts, income inequalities, orbits of comparison, and degrees of insecurity. Positive and normative implications are discussed. [ABSTRACT FROM AUTHOR]

Theories of the globalisation of innovation assume that multinational corporations (MNCs) distribute their innovation activities hierarchically, with advanced technology being confined to the advanced industrialised countries, while more routine low-end innovation is decentralised in a few developing countries. The emergence of about 40 research and development (R&D) centres in Beijing, China, many of which engage in basic and advanced applied research, challenges the above assumption. This article argues that the cheap and abundant highly skilled labour of the latecomer countries is an essential factor in attracting global R&D activities but that this factor is far from being a sufficient condition for the presence there of advanced R&D activities. Through its analysis of the historical transformation of local institutions and of their co-development with MNCs, this paper identifies four major knowledge assets that explains why Beijing could attract advanced R&D activities. First, Beijing has developed a strong entrepreneurial culture that creates highly motivated engineers who are eager to learn new knowledge from abroad. Second, the experienced Chinese returnees provide a critical bridging role between Western R&D management knowledge and local engineer culture. Third, the lack of inter-firm trust and networks makes the entrance of MNCs into a 'loose' cluster much easier. Fourth, the large and dynamic Chinese market that desires high-tech products with low prices shortens the product life cycle, forcing MNCs to upgrade their R&D facilities in China. The findings show that the co-development of local institutions with the MNC R&D centres can create locational windows of opportunity for advanced R&D activities to be carried out in unconventional sites outside the Triad countries. This article concludes with the discussion on how Dunning's Ownership, Location and Internalisation (OLI) framework and Mathew's Linkage, Leverage and Learning (LLL) framework might be useful in explaining this new phenomenon. [ABSTRACT FROM AUTHOR]

Qian (2000) and others suggest that post-1994 tax and banking reforms in China, combined with the development of markets for allocating resources, influenced the economic performance of township-village enterprises (TVEs) and private enterprises (PEs). This paper uses Chinese provincial level data to search for evidence of advantages and/or disadvantages offered to TVEs and PEs before and after the 1994 reforms. We define a sectoral net income-based measure of overall efficiency and decompose the measure into components that highlight the existence of credit constraints, output target constraints and labour hiring constraints. The results offer empirical support for Qian and others explanation of why private enterprises eventually emerged as the dominant institution for allocating resources in post-1994 rural China. [ABSTRACT FROM AUTHOR]

Temporary migration due to lack of social security for migrants, rural land tenure insecurity due to frequent land reallocation and abusive land requisition due to lack of functioning land markets are all major policy challenges that China is facing in its yet-to-be finished economic transition. Although there have been intensive studies and various policy recommendations on these issues, most discussions have so far neglected the close interrelationships between these issues and have failed to analyse them in an integrated framework. The paper aims to establish such an analytical framework. By taking into account the impacts of China's characteristics, that is a large developing country in transition, on the country's migration and rural land policies, we propose a policy package to address these challenges in a holistic manner. [ABSTRACT FROM AUTHOR]

This paper argues that China's response to economic liberalisation, which artificially focuses on promoting particular sizes of firms, cannot improve technological capabilities in the ICT manufacturing industry. Not only have historical and economic conditions created difficulties in adopting Korean and Taiwanese style policies, but also competitive ICT firms in the global economy are increasingly moving from manufacturing to innovation activities against a backdrop of increasing economic liberalisation. Given the WTO and ITA agreements, the main path which Korea and Taiwan employed is now unavailable. The government therefore should leave the size of firms to market forces. [ABSTRACT FROM AUTHOR]

In his analysis of choke of technique in China, Shigeru Ishikawa argues that changes in choice of technique remit both from changes in objectives and limiting factors and from expansion in the range of technical alternatives available, and suggests that Chinese planners in the post-Cultural Revolution period enjoy a substantially wider range of alternatives than was available at the time of the Great Leap Forward. In this paper we accept Dr. Ishikawa's findings that there was a marked advance in the level of technologies and techniques attained in the modern manufacturing sector and considerable progress in the techniques of small-scale industries in China in the 1960's, and examine some of the factors that contributed to this increase in the range of technologies during this period. [ABSTRACT FROM AUTHOR]

This paper attempts to uncover what seem to be the principal problems pertaining to the choice of technology and technique which the Chinese planners have faced in each of several phases since the inception of the Chinese People's Republic, and examines the way in which the Chinese have apparently attempted to solve these problems. Although some attempt is made to evaluate the main findings, lack of information still prevents a detailed evaluation of the specifies of the Chinese choice of technology and technique, and of its relevance elsewhere, and attention is mainly concentrated here on the broad nature of the problems. [ABSTRACT FROM AUTHOR]

The rapid growth of China's export sophistication and the driving factors are a matter of discussion in the literature. This study constructs a new measurement for net sophistication by utilizing the world input-output database and excluding the technologies embodied in foreign inputs. We find that although China's net sophistication has been increasing, it is much lower than that of developed countries. Based on new measurements, we explore the impact of FDI on domestic firms' net sophistication in China using data from 2000 to 2010. The results suggest that FDI has competition effects on domestic firms. Net sophistication may increase in the short term as domestic firms adjust their production by reducing the use of foreign technology to reduce costs. However, this increase in net sophistication is not sustainable without technological upgrades. Under long-term competition from foreign firms, domestic firms' net sophistication decreases. Our findings provide clear policy implications for labor-rich developing countries that seek to upgrade exports by attracting FDI. [ABSTRACT FROM AUTHOR]

Relatively few studies have examined the 'echo effect' of health shocks related to prenatal and early-life malnutrition, that is, whether the legacy of such shocks is transmitted to the next generation. This study addresses this gap by leveraging extreme malnutrition during the Great Leap Forward famine in China, and by examining its intergenerational consequences. Using a difference-in-differences framework, we estimate the effect of the famine on a wide range of outcomes of children of mothers who were exposed in-utero and in early-life including income, education, and employment, indicators that have not been considered in detail before. Using a refined measure of famine exposure at the prefecture level in rural areas, and by exploiting rich data on those directly affected and their children, we find that on average, the famine had negative echo effects on second-generation outcomes. These echo effects are primarily due to adverse impacts on daughters. Mechanisms include impacts of the famine on the human capital of mothers, and suggestive evidence of son preference. Our results withstand a battery of robustness, specification and falsification checks. [ABSTRACT FROM AUTHOR]

Reranking in the move from one income distribution to another makes it impossible to infer from changes in Lorenz and generalised Lorenz curves how income growth among those toward the bottom of the initial income distribution compares to that among those toward the top, and whether there has been income growth among those who were initially poor. Decompositions allowing for reranking indicate that economic growth in China and Vietnam has been better for households who were initially poor than changes in the Lorenz and generalised Lorenz curve and poverty growth curve would suggest. [ABSTRACT FROM AUTHOR]

As China seeks to consolidate its position as an emerging global economic power, reforming the largely inefficient state-owned enterprises (SOEs) presents a major challenge. Using a comprehensive micro data set, we investigate whether SOEs in China have benefited from the managerial, technical and organisational skills possessed by multinational firms operating in the economy, and conclude that the evidence in favour of positive spillovers is not overwhelming. Limited regional linkages and low level of absorptive capacity are found to be the main reasons for this disappointing performance. Policy makers involved in the reform of SOEs should ensure that managers have the right incentives to make long-term investment in absorptive capacity development. [ABSTRACT FROM AUTHOR]

The World Bank, other development institutions and a few countries, like China, have elaborated resettlement policies which envisage Resettlement with Development (RwD). However, the understanding of Development embodied in the discourse of RwD is confused. After distinguishing between the concepts of development as outcome and development as process, we investigate two projects of environmental resettlement in Inner Mongolia, PRC. The planning and implementation of these projects reveal the state's interpretation of RwD. There has been some Development (outcome) in some places, notably improvements in material well-being. However, the processes of development have been more extensive, involving increased participation in markets for produce and labour. The state, we conclude, identifies involvement with markets as the principal means of achieving material Development outcomes. [ABSTRACT FROM AUTHOR]