ENDOGENOUS INNOVATION GROWTH THEORY AND REGIONAL INCOME CONVERGENCE IN CHINA

Endogenous innovation growth theory is tested by using panel data for 27 provinces across China. R&D expenditure and openness are added to the standard convergence regressions to control for different structural characteristics in each province. A standardized ʹt-barʹ test for unit roots is applied to examine the properties of the data and identify a long-run relationship among the variables. By-allowing for differences in the aggregate production function across regions, we find evidence of convergence. The empirical results support the endogenous innovation growth model in which regional per capita income can converge given technological diffusion, transfer and imitation. Copyright © 2001 John Wiley & Sons, Ltd.