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31. Functional Distribution of Income and Economic Growth in the Chinese Economy, 1978-2007

Author:
Ricardo Molero Simarro
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper seeks to analyse the relationship between functional distribution of income, aggregate demand and growth in Chinese reform economy. For this purpose the Bhaduri-Marglin Model is used, stating the theoretical possibility of both profit-led and wage- led growth regimes. Subsequently, the principal literature on the evolution of factor‟s shares in China is reviewed. The statistical series for the period 1978-2007 are reconstructed in order to carry out our analysis of the relations between capital‟s share and investment, on one hand; and labour‟s share and consumption, on the other. Supported by the Model‟s preliminary estimations, it is argued that Chinese growth has been largely profit-driven. Finally, the implications are presented vis-a-vis concerning Chinese economic prospects.
Topic:
Development, Economics, Reform, and Investment
Political Geography:
China and Asia

32. Continental Drift: China and the Global Economic Crisis

Author:
Sangaralingam Ramesh
Publication Date:
01-2010
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The economic prosperity associated with the Coastal regions of China has not ‘trickled’ down to the Western and Central regions sufficiently enough to eliminate the disparities in income between the regions. Indeed, the disparities between China’s Coastal regions and its other regions continue to deepen. In the Mao period, central planners held the mistaken belief that investment in the railways and development of heavy industry in the interior parts of China would bring prosperity. In the reform period and beyond, the focus of economic development in China has been to take advantage of China’s low labour costs. In the earlier part of the reform era the focus of economic reforms centred on the development of Special Economic Zones (SEZ’s) .In the second phase of reform policies were centred on the High Technology Development Zones [NHTIDZ’s].A characteristic feature of both SEZ’s and NHTIDZ’s is that they represent a concentration of infrastructure within a predefined spatial area. The current global economic crisis has presented China with a unique opportunity to deepen the economic transformation of the coastal regions by shifting the focus of economic development to its interior regions. Indeed, the government’s efforts to stave off the effects of the global crisis on the Chinese economy by attempting to maintain economic growth above 8% by utilising an expansive fiscal stimulus has had the effect of initiating the transformation of the interior Chinese economy. This then represents China’s third stage of economic development since 1949. This paper will examine the factors leading to China’s third stage of economic development which has resulted from the global economic crisis – the Continental drift of the economic development of China.
Topic:
Infrastructure, Global Financial Crisis, Investment, Stimulus, and Prosperity
Political Geography:
China and Asia

33. The Asian Financial Crisis, Uphill Flow of Capital, and Global Imbalances: Evidence from A Micro Study

Author:
Brahima Coulibaly and Jonathan Millar
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This study assesses the role of the Asian Önancial crisis of the late 1990s in the emergence and persistence of the large current account surpluses across non-China emerging Asia, which have been a signiÖcant counterpart to the U.S. current account deÖcit. Using panel data encompassing nearly 3,750 Örms, we trace the current account surpluses to a marked and broad-based decline in corporate expenditures on Öxed investment in the aftermath of the crisis that cuts across a wide spectrum of countries, industries, and Örms. The lower corporate spending in turn depressed aggregate investment rates, widened the saving-investment gap, and allowed the region to turn into a net exporter of capital. We then consider the factors behind this reduction in postcrisis corporate investment. While weaker Örm-level fundamentals in the postcrisis period seem to explain part of the drop in investment rates, ongoing re-structuring owing to large debts accumulated and excess investment undertaken in the run-up to the crisis has been the main source of restraint postcrisis corporate investment. The results suggest that even after a decade, the e§ect of the Önancial crisis is still a§ecting corporate investment decisions in emerging Asia, and that as the restructuring completes its course, investment rates will likely rise to contribute to a gradual reduction in the regionís current account surpluses.
Topic:
Emerging Markets, Financial Crisis, Economic Inequality, and Investment
Political Geography:
Asia