State and market integration in China: A spatial econometrics approach to 'local protectionism'
Speaker
Abstract
| In the past two decades, controversial evidence has been produced supporting the case for local protectionism and cellularity of regional economies in China. This paper overviews the most important contributions and presents a new approach which applies spatial econometrics on prefectural-level data in order to explicitly test for the presence and reasons of the driving forces for the cellularity. Specifically, we compare two explanations for the spatial fragmentation: administrative structure (including, but not limited to the infamous ‘provincial protectionism’) and linguistic heterogeneity (considered as proxy for the factors of culture and identity). The main advantage of the method used in this paper is to rely on a theoretically less biased and internal benchmark for assessing the impact of provincial borders and linguistic zones on spatial interdependences, as we compare within province and across province growth spillovers for neighboring prefectures. We show that provincial borders exert a strong impact on spillovers. Further, we also analyze spillovers of local public expenditures, which could be interpreted as proxies for government interventions. Again, provincial borders matter. On the other hand, our analysis does not find any significant impact of language on the emergence of the cellularity. |
| Alexander Libman is assistant professor (Juniorprofessor) of international political economy at the Frankfurt School of Finance. He holds PhD degrees in economics from the University of Mannheim (Dr. rer. pol., 2009) and the Russian Academy of Sciences (Cand. Sc., 2005), as well as Diploma (MA equivalent) in economics from the Finance Academy under the Government of the Russian Federation in Moscow (2003). In addition to his position at Frankfurt School, he is also Head of Research Group on New Political Economy at the Institute of Economics of the Russian Academy of Sciences and research fellow at the East China Normal University in Shanghai. In the past he has been visiting researcher at Stockholm School of Economics and University of Marburg. His interests include political economics of regional integration and federalism, political economics of non-democracies and empirical public economics. |
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| Johannes Meuer |
