Endnotes

¹For example, many other indexes such as household consumption level and household income are not available at the prefecture or county level.

²Appendix A presents the Chinese administrative system and illustrates the division of the PRC’s regions.

³Appendix B presents the measures of regional disparities used in this paper.

⁴Urbanization rates of Beijing, Tianjin, and Shanghai in 2005 were 82%, 73%, and 89%, respectively, while the average urbanization rate of the whole nation was only 43%, and their per capita GDP (2006) ranked second, third, and first in 31 provinces respectively.

⁵The decomposition method is described in part 3 of Appendix B

⁶We divide the sampling period into several time intervals after accounting for lagged effects of some institutional factors and labor capital on regional economic growth and eliminating effects of business cycle fluctuations. Here T is 3 years.

⁷Since 1999, the gross industrial output value of state-owned and state-controlled enterprises have been included in provincial statistical yearbooks and are both regarded as gross industrial output value of stateowned enterprises, which leads to inconsistency with previous data. Therefore, here we only choose the index of gross industrial output value of state-owned enterprises.

⁸As for testing autocorrelation, Stata software provides two indexes: modified Bhargava et al. D-W and Baltagi- Wu LBI (locally best invariant).

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