Foreign Direct Investment and Unequal Regional Economic Growth in China

FIGURE 3. The distribution of the relative growth rate, DGY, versus YEAR and level
of relative income DY, calculated by the estimated equation (42). (Sample
conditions: DSEZ = 0, GI1 = GI2, DY2 = 0).

As seen the R² is very low this is, however, in accordance with the above discussed
aspect that investments positively distributed after relative income level will not give
a significant positively distributed growth.

The picture connected to the estimated formula is shown in figure 3. The figure shows
as figure 2 that the growth is converging in the start and end of the period and
diverging in the middle of the period when the investments boomed and concentrated
relatively on rich areas. As figure 2 figure 3 shows that a given distribution of
investment growth will result in a distribution of growth rates modified by a
multiplier which declines at increasing income.

7. GROWTH IN SUBREGIONS

The regional income inequality changes in the three economic belts, i.e. the coastal
area, the central area and the western area. The income inequality among the
provinces within the region (or area) is calculated by using the same formulae above,
but the country data is replaced by the regional data. For example, in formula (1) in
the appendix2, Y will change to be the per capita income in the region and P will be
the population in the region; in formula (2) ∑ y_i will be the sum of per capita income
in the region and n will be the number of provinces in the region; and in formula (3),
rank will be re-arranged according to the size of per capita income in the region.

Tables 4-6 in the appendix 2 show the income inequality within the region in the three
economic areas in China. The names of variable are changed to such as D1, D2 and
D3, etc. in which 1 indicates the coastal area, 2 the central area and 3 the western area.

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