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An Assessment of the Open Up the West Policy in China

Wallin, Frida (2006)
Department of Economics
Abstract
In 1999 the Chinese government initiated a large investment project directed towards the western region of the country in an attempt to boost the economic growth in order for it to catch up with the much more affluent coastal areas. The campaign is called Open Up the West (Xibu da kaifa) and its most prioritized areas have been announced as infrastructure construction, environmental protection, industrial upgrading, human capital accumulation and science & technology research, and finally opening up the economy to foreign direct investments (FDI).
This study examines the economic growth effects of this policy and what the driving forces influencing the economic growth are. Using Jones theoretical model with technology diffusion and... (More)
In 1999 the Chinese government initiated a large investment project directed towards the western region of the country in an attempt to boost the economic growth in order for it to catch up with the much more affluent coastal areas. The campaign is called Open Up the West (Xibu da kaifa) and its most prioritized areas have been announced as infrastructure construction, environmental protection, industrial upgrading, human capital accumulation and science & technology research, and finally opening up the economy to foreign direct investments (FDI).
This study examines the economic growth effects of this policy and what the driving forces influencing the economic growth are. Using Jones theoretical model with technology diffusion and infrastructure as the theoretical framework, an empirical model containing the significant variables from the development policy is established. Subsequently, the model is empirically tested with Whites robust standard error model without any effects in order evaluate the policy outcome thus far. The estimation results partly recognizes Jones theoretical model that emphasize the importance of research in science & technology and opening up in terms of FDI to enhance economic growth. In addition, the environment variable also turned out significant and it will be crucial for the further growth process to pursue a sustainable development. However, given that the results showed that the investments in infrastructure construction and human capital have increased since the policy implementation, the effect of these investments could be seen in a longer time perspective as positive to the economic growth of the region. Finally, the industrial upgrading variable turned out insignificant in the empirical testing, (Less)
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@misc{1338377,
  abstract     = {In 1999 the Chinese government initiated a large investment project directed towards the western region of the country in an attempt to boost the economic growth in order for it to catch up with the much more affluent coastal areas. The campaign is called Open Up the West (Xibu da kaifa) and its most prioritized areas have been announced as infrastructure construction, environmental protection, industrial upgrading, human capital accumulation and science & technology research, and finally opening up the economy to foreign direct investments (FDI).
This study examines the economic growth effects of this policy and what the driving forces influencing the economic growth are. Using Jones theoretical model with technology diffusion and infrastructure as the theoretical framework, an empirical model containing the significant variables from the development policy is established. Subsequently, the model is empirically tested with Whites robust standard error model without any effects in order evaluate the policy outcome thus far. The estimation results partly recognizes Jones theoretical model that emphasize the importance of research in science & technology and opening up in terms of FDI to enhance economic growth. In addition, the environment variable also turned out significant and it will be crucial for the further growth process to pursue a sustainable development. However, given that the results showed that the investments in infrastructure construction and human capital have increased since the policy implementation, the effect of these investments could be seen in a longer time perspective as positive to the economic growth of the region. Finally, the industrial upgrading variable turned out insignificant in the empirical testing,},
  author       = {Wallin, Frida},
  keyword      = {economic growth,Development Policy,Western China,Regional Investments,Economics, econometrics, economic theory, economic systems, economic policy,Nationalekonomi, ekonometri, ekonomisk teori, ekonomiska system, ekonomisk politik},
  language     = {eng},
  note         = {Student Paper},
  title        = {An Assessment of the Open Up the West Policy in China},
  year         = {2006},
}