Technological change and China's regional disparities — A calibrated equilibrium analysis

Abstract

We in this paper assess the impacts of technological change on China's regional disparities using a general equilibrium model of multiple regions and multiple sectors. We use the most recent available Chinese interregional data to calibrate the model parameters for 1987 and 2000. We then assess the impacts of neutral, biased, and aggregate technological changes on China's regional disparity by conducting counterfactual experiments. The results generally suggest that China's overall technological change between 1987 and 2000 has increased China's regional disparities. The results also suggest that neutral technological change reduces China's regional disparities while biased technological change increases disparities and the influences of the latter outweigh those of the former and the net effects of technological changes on regional disparities are increasing.