Limited linkages from growth engines and regional disparities in China

Pronounced disparities in income and economic opportunities exist between the coastal and the inland regions of China. This paper explores the proposition that regional disparities in China are related intimately to the structure of exports and foreign direct investment, which results in limited linkages from the growth engines. The spillover and migration effects of exports and FDI on regional income inequalities are investigated. The emphasis on FDI-driven, labor-intensive, processing-type exports in the coastal regions has attracted relatively mobile and efficient resources from the inland regions, but it has offered only limited growth linkages to those regions. This reallocation of resources has exacerbated the backwardness of the inland regions.