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The article aims to explain regional economic development and economic convergence under the theme of spatial econometrics. The major idea behind the economic convergence is decreasing returns to capital accumulation. The economic convergence can be achieved by variety of theoretical and statistical models. There are so many advanced studies came out. They will facilitate convergence model specification and statistical testing for better efficiency.

This research note reconsiders China’s recent growth experience from an institutional convergence perspective. Based on the neoclassical production function of growth, a stochastic growth model incorporating an institutional variable is specified and estimated using cross-province socioeconomic data for 1984–2001. While three explanatory variables all contribute to growth, the most significant and important effect comes from the variable of institutional progress. This suggests that China’s good economic performance since 1978 can be attributed to the convergence of China’s economic institutions with the economic institutions of modern capitalist economies, particularly the East Asian capitalist economies. If this suggestion is accepted, then China’s newly emerging regionalism can be better understood as resulting from an uneven institutional convergence process in a spatial context. These results are different from those of conventional Chinese regional development studies. They are important because they represent the first detailed evidence on the role of institutional effects in a Chinese regional economic study. [ABSTRACT FROM AUTHOR]