Retesting the Separability of China＇s Rural Households

This article retests the separability of China’s rural households in light of growing doubt about the sustainability of high economic growth in China.If a household’s production decisions are "separable "from the household’s consumption decisions,generally this suggests there is no surplus labor.Many scholars aver that China’s surplus rural labor has spurred rapid economic growth,but concerns have arisen as to whether China still has surplus labor available.We investigate this issue using rural household panel data from 1993 to 2009.The regression results confirm that households in rural China have progressed from being non-separable to separable.The estimation results for both the entire country and regions reject the separability hypothesis before 2004 but fail to reject the hypothesis after 2004(with the exception of the central region).These results suggest that China ’s surplus labor supply is dwindling,especially in the eastern and the western regions.The sustainability of China’s high economic growth is questionable in the absence of a large reservoir of surplus rural labor.     

Financial Development, Economic Growth and Adaptive Efficiency： A Comparison between China and Pakistan

The strong economic growth in China is difficult to reconcile with its inefficient financial system. The puzzle of China＇s financial development and growth can be explained through a dynamic criterion of adaptive efficiency, rather than through allocative efficiency. Using the framework of an autoregressive distributed lag model, the present paper tests the hypothesis that the GDP growth rate is dependent on financial development along with other variables in China and Pakistan. The hypothesis cannot be rejected in both cases. However, the results show that economic growth has a negative relationship with credit to the private sector in China. We conclude that financial development is a source of China＇s high growth rate and that the banking system is still under an evolutionary process, involving the pursuit of social objectives instead of the sole objective of profit maximization. Our results provide some implications for other developing countries like Pakistan.     

The impact of foreign direct investment and trade on economic growth Taking China, Korea, Malaysia, Philippines ＆ Thailand for example

In this study the authors make efforts to survey the impact of foreign direct investment and trade on the economic growth of five East Asian countries, China, Korea, Malaysia, Philippines and Thailand. Using an augmented production function （APF） growth model, the authors apply panel data Method and data span is from1980 to 2006. The required data are extracted from World Development Indicator 2008. The result shows that a co-integration relationship between growth and its determinants in the APF model is supported. Firstly, the study shows that with the increasing the inflow of foreign direct investment, positive impact on growth in Thailand, Korea and China is proved. However, this impact is negative in Philippine and Malaysia. Also the impact of trade on economic growth has the same result with FDI impact in sign. Further, the impact of labor force on growth is not significant in these countries and the effect of gross fixed capital on growth is positive and has a very high impact on selected countries.     

Micro Econometric Analysis of Determinants of Occupational Choice in Algeria

A review of the literature on the issue of labor market participation and occupational choice allows to see that researches on this one turned more on developed countries. In underdeveloped countries, including Algeria, the determinants of participation in economic activity and individuals＇ occupational choice remain understood, despite their economic and social importance, since the degree of economic vulnerability and social development is strongly correlated with the occupied job. This work is not concerned with income from the labor market but rather the process that takes place upstream, that is to say, the integration into the labor market. This paper will study the labor market functioning by analyzing the supply and demand of labor. So the first step is to analyze the participation determinants in economic activity and in a second stage to determine the role of individual characteristics, in particular human capital for the tenure choice. The aim of this work is to answer the following questions： （1） What are the factors that influence individual＇s participation in the labor market？ Is there a difference between men and women？ （2） What are the occupational choice determinants of an individual on the labor market？ Is this the same factors for men and women？ （3） What are the causes of failure in the labor market？ To answer all the concerns, authors have exploited the employment surveys conducted by the National Office of Statistics （NOS） from Algerian households （employment surveys 1997 and 2007）. For processing and data analysis, authors applied several econometric techniques： models of discrete choice （binary logistic regression） and segmentation techniques. Four major findings emerged from this study： First, authors note that women＇s participation in economic activity is following logic quite different from that of men. For women, the education and training determine the participation in the labor market. For men, it is rather the age that determines particip     

Restructuring in China＇s State-owned Enterprises： Evidence from the Coal Industry

Usingfirm-level data for China ＂s state-owned coal mines, this paper examines the impact of privatization, corporatization and debt restructuring of state-owned enterprises on technical efficiency. A stochastic frontier production method is applied to a panel dataset from 2000 to 2007. The simultaneous study of these three measures makes it possible to study individual effects more precisely than otherwise. The study shows that the three reform initiatives are all able to improve technical efficiency in state-owned coal mines. The finding of a significant efficiency improvement from relinquishing state ownership provides an alternative to privatization. The study of debt restructuring and technical efficiency has not been documented in the published literature.     

is China＇s Economic Growth Extraordinary or Mediocre？ The Role of the Exchange Rate

Results derived from evaluations using different measures for China＇s economic growth are divergent, especially when the RMB exchange rate has experienced large depreciation. Focusing on the changes in the RMB exchange rate matching the demands of economic development, we offer some plausible explanations for the variations in the evaluation results. The significant gaps between different economic performance evaluation results before the mid-1990s, and evidence from international comparisons of factor productivity indicate that the quality of economic growth in China is different from that of other economies. Evaluation of economic development should take into account both quantitative expansion and qualitative improvement. From this perspective, evaluation results indicate qualitative improvement in the Chinese economy after the mid-1990s.     

China＇s Labor Transition and the Future of China＇s Rural Wages and Employment

This paper contributes to the assessment of China＇s rural labor markets. According to our data, the increase in off-farm employment that China experienced during the 1980s and 1990s continued during the 2000s. Our analysis shows that migration has become the most prevalent off-farm activity, although the destination of migrants is shifting from outside of one＇s province to destinations closer to home. The present paperfinds that large shares of male and female individuals, especially those under 40 years, are working off the farm. These findings represent an important contribution to the labor economics field. First, the results of the present paper reveal that the labor transition from the agricultural sector to the non-agricultural sector for key segments of China＇s rural labor force is nearly complete. Second, although a large share of China ＂s rural labor force work in agriculture, most of these workers are older men and women （and likely would not be willing to take low-wage, labor-intensive jobs）. Third, the rising unskilled wage rate in China is partially a result of the tightening of the labor force in the young age cohorts. Finally, due to factors associated with the one child policy and other demographic transition forces, successive age cohorts will continue to fall in absolute number in the coming decade. Assuming China＇s growth continues, we expect to see further wage increases since it will take higher wages to coax more workers to work off the farm.     

Guest Editors＇ Words

For this Special Issue we have endeavored to compile a set of papers that carry a coherent message to the readership of China ＆ World Economy. The work builds upon and seeks to extend two recent topics of debate in China. First, we recognize and add to the literature on tightening labor markets, rising wage rates and the emergence of a new era in China＇s economic development. Second, we contribute to the debate on the seriousness of inequality inChina.     

Distribution and Permanent Cyclical Fluctuation of Growth in China

Combing the consumer utility function with technology choice and the firm＇s profit maximization function, this paper establishes a model, then basing on the firm＇s behavior in the capital marketing, the equilibrium can be reached. So the phenomenon of permanent cyclical fluctuation of growth can be presented in this model. The reason, basing on the model, is the inharmonious proportion that is distributed to the labor and investor. The empirical research in China proves the hypothesis. At last, economic policies for escaping from permanent cyclical fluctuation have been put forward.     

Does Property Rights Reform Improve the Efficiency of China＇s State-owned Banks？

China ＂s state-owned banks have undergone radical changes over the past two decades, including partial privatization and listing in both the Hong Kong Stock Exchange and the Shanghai Stock Exchange. This paper evaluates the effects of these changes by analyzing the efficiency of Chinese banks over the period 1998-2012 using two frontier techniques and comparative analysis. The findings suggest that the performance and technical efficiency of the Big Four banks improved considerably after property rights reform, but this improvement is not sufficient to keep the banks at the production frontier. Tobit regressions confirm that static ownership effects are negative but that the property rights reform has had significant and positive effects on the technical efficiency of state-owned commercial banks. GDP growth and the financial crisis have had positive effects on the efficiency of Chinese banks, which is more significant for joint stock commercial banks than state-owned commercial banks. The results indicate the value of ownership reforms of state-owned asset management companies and insurance companies and the establishment of a countercyclical capital buffer.     

Is China up to the Test？ A Review of Theories and Priorities for Education Investment for a Modern China

This paper reviews the key theories relating to the role of education in economic development and social change and how education, as a critical component of total factor productivity, contributes to sustained economic growth. It examines how China ＂s education policy reflects the country＇s unique dual economy. Focusing on the post-reform period, the paper contends that while progress has been made, there are risks to China＇s future growth prospects from failing to reap the benefits of sound education policy. It argues that if the Chinese education system is to continue to be a driver of rather than a drain on economic growth, and if China is to successfully manage its transition towards more inclusive, sustainable and equitable growth, reforms will be needed to improve the quality of education at all levels and to create an environment in which China＇s extensive human capital is duly recognized and respected. Crucially, the education system should be transformed to ensure it promotes a comprehensive range of human capabilities, including those that go beyond the part humans play in augmenting production possibilities.     

Investment and Innovation State Support of Agriculture in Russia as a Condition of WTO

Russian agriculture is one of the industries operating in the unstable economic situation in a developing market taking into account risks of the world economy, economic, political, and climatic factors. The role of agriculture is to provide people＇s needs for food, significant effects on employment, the efficiency of domestic production, and way of life in rural areas by obligatory preserving food security in Russia. One of the major tasks for agriculture is the development of innovations and investments aimed at improving the competitiveness of the domestic agricultural sector. Russia＇s membership in the WTO since 2012 is getting a particular importance in the innovation and investment support of agriculture. The strategy of innovative development of the Russian Federation until 2020 ＂Innovative Russia--2020＂ assumes three possible options for innovative development： inertial （directed on imports）, catch-up development and a local technological competitiveness and a variant of achieving leadership in leading scientific and technical sectors, and fundamental research. A positive point is that the strategy provides an algorithm of state support of the innovation cycle. The innovation cycle is the process associated with the sequence of innovation transformations （scientific or business ideas） in products, technology, business process and launches it on the market for commercial use. A positively developing regional aspect is of great importance.     

Labor Market Reform, Income Inequality and Economic Growth in China

The year 1996 was a turning point both in terms of Chinese labor market reform aria m China＇s economic growth pattern. Before 1996, labor market reform was mainly implemented through adjustment of people＇s occupation and income structure. Since 1996, employment restructuring has led to differentiation in terms of employment status. Labor market reform in the former stage resulted in slow growth in wages, whereas reform in the latter stage enhanced economic efficiency. Both stages have enabled the Chinese economy to apply its comparative advantage of low labor cost. Labor market reform has also increased income disparity and, therefore, new challenges are posed in sustaining economic growth. China needs to adjust its development strategies and introduce labor market reform that can improve income equality, so as to achieve sustainable economic development.     

Development in China＇s Foreign Trade： 2003-2012

China＇s foreign trade has entered a new stage, marked by some profound changes since 2003. After 5 years ＇consecutive high growth, China＇s foreign trade experienced a significant slowdown in growth following the onset of the global financial crisis in 2008. The purpose of this article is to present a review of the development in China＇s foreign trade over the past l O years, and to explore important changes that have taken place during this period of time. A majorfinding of the presentpaper is that the traditional forces driving the high export growth in China, that is, low-cost labor, low-cost resources and low-cost money, have been disappearing. The policy implication is that over the next l O-15 years, the most important conditions for sustaining high export growth will be promoting the development and export of private enterprises in traditional heaw industries and high-technology industries, and relying on technological progress and high produc6vity to propel export expansion.     

Inter-industry Technology Spillover Effects in China： Evidence from 35 Industrial Sectors

The present paper calculates 35 industrial sectors’ similarity matrices for the period of 1997-2008 using China’s input-output tables for 1997,2002 and 2007,and uses these to measure inter-industry technology spillover to analyze the spillover effects on industrial sectors’ labor productivity.The empirical analysis shows that inter-industry technology spillover has a significant positive effect on the labor productivity of each industry.The elasticity of productivity effects of inter-industry technology spillover is not only larger than that of direct R&D input,but also increases over time.We group the industries into four major categories and find that the inter-industry technology spillover effect within the categories is,on average,greater than that between the four categories,indicating that technology spillover occurs more easily between similar industries.This research shows that the interindustry technology spillover effect in China has begun to increase,and the government should take advantage of this effect.     

Business Cycle Asymmetry in China： Evidence from Friedman＇s Plucking Model

Friedman＇s plucking model of business fluctuations suggests that output cannot exceed an upper limit, but it is occasionally ＂plucked＂ downward below trends as a result of economic recessions. This paper investigates China＇s business fluetuations using quarterly real GDP data for the period 1978 2009. Our results show some evidence supporting Friedman＇s plucking model. We find that a ceiling effect of real output exists, and that negative asymmetric shocks significantly affect the transitory component, which captures the plucking downward behavior during the recession. The results also suggest that the basic asymmetric unobserved component model is not appropriate for directly modeling China＇s real output because the business＂ cycle is inaccurately measured, but it works quite well when considering a structural break in the second quarter of 1992. The results reveal that although China＇s economy strengthened in the second quarter of 2009, it is essential for China＇s government to take further positive and effective measures to maintain sustainable development of the economy.     

Effect of Migration on Children＇s Self-esteem in Rural China

China＇s rapid economic growth has been facilitated by its large volume of rural to urban migration. China ＇s projected future development, especially increasing urbanization, implies that such migration will further intensify. However, migration does not come without cost. There are concerns about the potential negative impacts of migration on children＇s care, education, and, in particular, the self-esteem of children left behind in villages where one or both parents have out-migrated to cities. In this paper, we employ unique survey data collected from Shaanxi Province, where more than 4700 ninth grade students from 36 rural junior high schools in five counties were surveyed in late 2011. The results show that having both parents migrate into cities significantly reduced children ＂s self-esteem. The effects are also gender sensitive. Girls that had a father or both parents who had out-migrated were inclined to have lower self-esteem than boys. Moreover, our study findings indicate that parental migration decreased children ＂s self-esteem more for individuals with initial low self-esteem.     

Is the Export-led Growth Hypothesis Enough to Account for China＇s Growth？

One of the missing pieces preventing us from understanding recent Chinese economic development is the role played by openness and capital accumulation in this process. The question is whether the sharp economic＇ growth that the Chinese economy has experienced is another case of export-led growth due to the open-door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates （and the consequent capital accumulation）. To answer this question, we employed an empirical framework of the cointegrated vector autoregressive model. The empirical results show that both investment （in physieal capital and R＆D） and exports, as well as the exchange rate policy, are relevant factors in explaining China＇s long-run economic growth over the past 4 decades.     

China＇s Regional Disparity and Its Policy Responses

The fruits of China＇s rapid economic development over the 3 decades have not been distributed fairly across different regions. Using data from a sample of 815 Chinese listed firrns during 1998-2004, our error-correction investment model showes evidence of different financial constraints on firms＇ investment in different regions. We argue that China＇s regional development policies have contributed greatly to the regional inequalities. To control the rising inequality, China has shifted its focus from the coast to the interior regions. However, it is becoming increasingly difficult for the government to direct the economy, as market mechanisms now have afar greater influence on the economy than the government does. The people-centered approach of the current leadership has meant that substantial attention has been placed on regional development disparities in an attempt to build a ＂harmonious society. ＂ China needs further extensive reforms if all the measures for reducing regional disparity are to be effective.     

Is the Chinese Economy Moving in the Direction of Tertiarization？

Drawing upon output, employment, consumption and trade data, this article examtnes whether there is an economic tertiarization trend in China ＇s economy and evaluates the common factors driving current trends. It shows that the tertiarization trend is evident for the overall economy and most regions in terms of the service nominal value-added ratio and service employment and consumption. However, the tertiarization trend is not significant in terms of the service real value-added ratio, and there is even some concurrent ＂detertiarization ＂ because of the decreasing proportion of services in imports and exports. lndeed, China ＇s tertiarization trend is far behind its industrialization trend The rise in the relative prices of services explains the rising proportion of household service consumption expenditure and further illuminates why the service real value-added ratio has not grown. The main cause for the growing percentage of service employment is the lag in service labor productivity growth in interaction with the price inelasticity of service demand ＂Cost disease ＂ has appeared in service consumption.