TY  - JOUR
AU  - Peng,Yusheng
AU  - Zucker,Lynne G.
AU  - Darby,Michael R.
TI  - Chinese Rural Industrial Productivity and Urban Spillovers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6202
PY  - 1997
Y2  - September 1997
UR  - http://www.nber.org/papers/w6202
L1  - http://www.nber.org/papers/w6202.pdf
N1  - Author contact info:
Lynne G. Zucker
Departments of Sociology & Public Policy
UCLA
Box 951551
Los Angeles, CA 90095-1551
Tel: 310/825-9155
Fax: 310/454-2748
E-Mail: zucker@ucla.edu

Michael R. Darby
John E. Anderson Graduate School of Management
University of California, Los Angeles
110 Westwood Plaza, Box 951481
Los Angeles, CA 90095-1481
Tel: 310/825-4180
Fax: 310/454-2748
E-Mail: michael.r.darby@anderson.ucla.edu
AB  - Chinese rural industry has grown three times faster than national GDP, surpassing agriculture in size in 1987, and now nearing half of the total Chinese economy.  We use a rich, new county-level data set to explore this dramatic growth.  We find that a Cobb-Douglas production function explains over 80 percent of across-county variation in 1991 rural industrial output per capita, with little role for idiosyncratic regional or provincial fixed effects.  There is a very large effect on productivity from being near cities (30 to 35 percent higher productivity for a county one standard deviation above average in nearness to population centers) due to embodied technology transfer from urban residents.  We find strong support for the hypothesis that saving from past agricultural income has provided start-up capital for rural enterprises.  However, higher land-labor ratios lead to greater allocation of labor and capital to agriculture instead of industry, although induced inflow of migrants reduces the effect on industrial labor.  Nearness to cities and more education increase capital and labor in rural industry. Substantial explanatory power (one third or more) for industrial labor and capital is attributed to provincial fixed effects, possibly reflecting local commercial and migration policies.
ER  -