Summary, Findings and Implications

In this paper, I constructed a regional development index for the People’s Republic of China (PRC). The index aims to assess overall economic and social development of the PRC’s provinces. It assesses achievements related to development in the provinces using ten field indices: economic development, productivity and R&D, human development, education, social equity, public services, social security, infrastructure, environment protection, and institutional development. These ten field indices constitute an overall regional development index. Natural resources and geographic location, and structural characters are also referenced.

The result demonstrates an interesting link between overall development and geographic location of the 31 provinces. Most of the east coast provinces ranked high, and most western provinces ranked relatively low. Six of the eight central and inland northeastern provinces, plus two western and one eastern provinces, ranked in between. This result shows a clear regional disparity in development.

The index also provides some evidence of possible changes. The two inland northeast provinces and two western provinces (Jilin, Heilongjiang, Inner Mongolia and Shaanxi), have relatively high positions (11th – 14th), which may imply some effectiveness of the central policies for western development and for revitalizing the northeast PRC that were launched in the late 1990s and recent years.

In terms of economic development, the provinces ranked quite similarly with their ranks on the overall index. Compared with the other field indices, economic development has a highest correlation coefficient with the overall index, although all ten field indices are equally weighted in the overall index. This implies that economic development catches most of the common features of the other field indices. This is also reflected in the relatively high correlation coefficients between the economic development index and most other indices. The correlation coefficients are especially high between economic development and infrastructure.

In spite of this, economic development is not the sole determinant for development in various other fields. This is shown by the ranks in a number of field indices, i.e., human development, education, social equity, public services, social security, environment protection, and to some extent, institutional development. In these fields, some economically less developed provinces performed well, and this may provide better conditions for their economic development in the future.

For example, although Shaanxi ranked low (23rd) in economic development among the 31 provinces, its overall rank was much higher (14th). This is because it achieved relatively good scores in education (6th) and public services (5th). These achievements place it in a good position in human capital formation, and therefore may contribute to its long-run economic development. Therefore, its overall rank is a more reliable indicator of its general position than its ranks in economic development or simple growth statistics.

As another example, Beijing ranked high in both the overall index (second) and a few field indices including economic development; however, its ranking in social security systems was very low (30th), due to the low coverage rates of these systems. This is a warning to the Beijing municipal government to make further efforts to develop its social security systems; otherwise the city may lose its competitiveness in recruiting workers or suffer from social instability in the long-term.

As a third example, the index system shows that Heilongjiang ranked at the middle tier in most fields, but its infrastructure is underdeveloped, ranking 29th among the 31 provinces. This information can certainly help the provincial government to discover the province’s bottleneck and to solve the problem.

In general, this index system provides clear information on the relative position of each province in different fields of development. Therefore, it can be a useful tool for provincial governments in identifying their urgent problems and determining their policy emphasis, and to formulate a balanced development strategy. It can also be a useful tool for the central government in assessing provincial development performance in general and in different fields, especially when a time series data set of the index system is established.

In addition, the system also gives economic researchers a convenient instrument for analyzing patterns of regional development in the PRC, and to find how different fields of development are related. Investors and other business people may also benefit from it, if they need to find an investment destination or trade partner region in the PRC based on their regional comparative advantages.

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