Key Factors of Recent Chinese Provincial Economic Growth

The aim of this paper is to analyse factors that affected Chinese provincial economic growth after the reforms of the early 1980’s through a panel analysis (period 1986-2001). The production function approach focuses on human capital, “space-serving” infrastructure, sectoral allocation of labour and on institutional changes. Indices relevant for the analysis are elaborated and provincial capital stocks estimated. The empirical results indicate the positive role of capital stock, human capital and physical infrastructure and underline that sectoral allocation of labour and institutional changes affected the level of aggregate output. The policy implications suggest redistribution to the poorest provinces investing in human capital and infrastructure to overcome bottlenecks and to attract investment.