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Title: Clustering, Growth, and Inequality in China

Author(s): Di Guo, Kun Jiang, Chenggang Xu and Xiyi Yang

Publication Date: December 2017

Keyword(s): China, clustering, Geography, growth and inequality and institutions

Programme Area(s): Development Economics, Industrial Organization and International Trade and Regional Economics

Abstract: This study examines the effects of China's industrial clusters on its economic growth and urban-rural income inequality. A density-based index (DBI) is developed to capture the unique features of such clusters in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that strong clusters and entrepreneurial clusters substantially enhance economic growth. Moreover, entrepreneurial clusters reduce urban-rural income inequality by increasing the income of rural residents. Identification issues are carefully addressed by deploying an instrumental variable approach.

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Bibliographic Reference

Guo, D, Jiang, K, Xu, C and Yang, X. 2017. 'Clustering, Growth, and Inequality in China'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12543