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Externalities in rural development - evidence for China, Volume 1
 
Author:Ravallion, Martin; Collection Title:Policy, Research working paper ; no. WPS 2879
Country:China; Date Stored:2003/03/28
Document Date:2002/08/31Document Type:Policy Research Working Paper
SubTopics:Environmental Economics & Policies; Achieving Shared Growth; Economic Theory & Research; Economic Conditions and Volatility; Inequality; Labor Policies; Health Economics & FinanceLanguage:English
Region:East Asia and PacificReport Number:WPS2879
Sub Sectors:General agriculture, fishing and forestry sectorVolume No:1

Summary: The author tests for external effects of local economic activity on consumption and income growth at the farm-household level using panel data from four provinces of post-reform rural China. The tests allow for non-stationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from under-investment in certain externality-generating activities, of which agricultural development emerges as the most important.

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