Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Ning Author-Email: zhning99@mails.tsinghua.edu.cn Author-Workplace-Name: Center for China Study, Tsinghua University, Beijing 100084, China Author-Name: HU Angang Author-Workplace-Name: Center for China Study, Tsinghua University, Beijing 100084, China Author-Name: ZHENG Jinghai Author-Workplace-Name: Center for China Study, Tsinghua University, Beijing 100084, China; Department of Economics, Geborg University, Sweden Title: Using Data Envelopment Analysis approach to estimate the health production efficiencies in China Abstract: Center for China Study, Tsinghua University, Beijing 100084, China; Department of Economics, Geborg University, Sweden Classification-JEL: C520, C140, I120 Keywords: Data Envelopment Analysis, health production, efficiency Journal: Frontiers of Economics in China Pages: 1-23 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0001-5 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:1-23 Template-Type: ReDIF-Article 1.0 Author-Name: HUANG Jiuli Author-Email: huangjl@tedamail.nankai.edu.cn Author-Workplace-Name: Center for Transnationals′ Studies and TEDA College, Nankai University, Tianjin 300071, China Author-Name: LI Kunwang Author-Email: Likunwang@nankai.edu.cn Author-Workplace-Name: Department of International Economics and Trade, Nankai University, Tianjin 300071, China Title: Foreign trade, local protectionism and industrial location in China Abstract: In this paper, we find that, in China, geographical changes of industrial bases in the 1980s had led to a slight drop in the extent of specialization and location imbalance, but in 1990s the specialization and industry imbalance have further developed. The geographical advantage for trade has a significant impact on the location patterns, and the effects of local protectionism are confined to the hinterland in 1990s. The role of comparative advantage in shaping industry location is evident, and some predictions derived from new economic geography are partially supported. Classification-JEL: R12, F14, F13 Keywords: foreign trade, local protectionism, industrial location Journal: Frontiers of Economics in China Pages: 24-56 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0002-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:24-56 Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Xiaodi Author-Email: cec_zhangxd@zju.edu.cn Author-Workplace-Name: School of Economics, Zhejiang University, Hangzhou 310027, China Author-Name: SUN Jingwei Author-Email: dl0427@163.com Author-Workplace-Name: School of Finance, Hangzhou Dianzi University, Hangzhou 310018, China; Postdoctoral Institute of College of Public Administration, Zhejiang University, Hangzhou 310027, China Title: An analysis of China's global industrial competitive strength based on vertical specialization Abstract: At the beginning of the 1990s, China witnessed an increase in its international competitive strength in technology-intensive and capital-intensive industries, and a decrease in strength in labor-intensive industries. This paper analyzes the effect of vertical specialization on China's international industrial competitive strength, explores how different industries have varying reactions under its implementation, and employs theory to explain the possible causes of these reactions. It is found that vertical specialization can help to strengthen China's global industrial competitiveness, and on that basis, some suggestions are given on how to improve that competitiveness. Classification-JEL: F00, L60, O11, O53 Keywords: vertical specialization, overall labor productivity, industrial competitiveness Journal: Frontiers of Economics in China Pages: 57-73 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0003-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:57-73 Template-Type: ReDIF-Article 1.0 Author-Name: ZHU Pingfang Author-Email: pfzhu@mail.shufe.edu.cn Author-Workplace-Name: Research Institute of Econometrics, Shanghai University of Finance and Economics, Shanghai 200433, China; Center for Economic Studies, Shanghai Jiao Tong University, Shanghai 200030, China Author-Name: LI Lei Author-Workplace-Name: Research Institute of Econometrics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: Direct effect of ownership and technology import: Firm level evidence from large and medium-enterprises in Shanghai Abstract: This paper explores the direct effect of ownership and technology imports under the framework of neoclassical economic theory. The econometric analysis is based on panel data from a random sample of large and medium-enterprises in Shanghai, during the period of 1998 to 2003. The results show that Sino-foreign joint ventures, Sino-foreign cooperative enterprises and foreign-funded enterprises (SANZI) enjoy higher labor productivity and total factor productivity (TFP) than domestic enterprises. Intra-firm diffusion of non-codified technology, proxied by ownership, is the main source of their better performance, whereas internally transferred codified technology makes little contribution to TFP. For state-owned enterprises, codified technology imports have significantly raised both labor productivity and TFP, but such positive effect is significantly dependent on the S&T human resource. In contrast, no evidence supports that introduction of foreign technology has enhanced the productivity in domestic nonstate-owned enterprises. The empirical results indicate that SANZI do not have a distinct advantage in their codified technology. In addition, inadequate investment in assimilation process and research and development together with inefficient management of science and technology activities, may impede the use of imported technology. Classification-JEL: O33, O16, J24, D24 Keywords: technology import, direct effect, FDI, labor productivity, TFP Journal: Frontiers of Economics in China Pages: 74-91 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0004-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:74-91 Template-Type: ReDIF-Article 1.0 Author-Name: LUO Changyuan Author-Email: Chyluo@fudan.edu.cn Author-Workplace-Name: Center for European Studies (CES), Fudan University, Shanghai 200433, China; China Center for Economic Studies (CCES), Fudan University, Shanghai 200433, China Title: FDI, domestic capital and economic growth: Evidence from panel data at China's provincial level Abstract: Based on panel data at the provincial level in China, this paper found that direct effects foreign direct investment (FDI) had on economic growth were of insignificance. However, through improving technical efficiency and crowding  in domestic investment, FDI produced positive effects on China's economy. The state sector still played a major part in the total fixed investment, therefore, direct effects on growth were significant. Although private sector was increasingly important for the whole economy, it had no direct influences on economic growth. Meanwhile, neither the state sector nor private sector made contribution to the improvement on technical efficiency. Classification-JEL: F21, O47, C33 Keywords: FDI, economic growth, TFP, capital accumulation Journal: Frontiers of Economics in China Pages: 92-113 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0005-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:92-113 Template-Type: ReDIF-Article 1.0 Author-Name: XING Chunbing Author-Email: xingchunbing@gsm.pku.edu.cn Author-Workplace-Name: School of Economics and Business Administration, Beijing Normal University, Beijing 100875, ChinA Title: Wage determination and returns to education in different ownerships of China: Evidence from quantile regressions Abstract: In this paper, quantile regressions is used to estimate wage equations of different ownerships. Quantile regressions give us distributions rather than a single estimate of the returns both to education and experience in each ownership sector. For state-owned enterprises (SOE), the returns to education tended to be larger at the bottom of the conditional distribution of wages in 1991 and 1993, and there was no such trend in 1997. For the private sector, however, the returns to education tended to be larger at the top positions in 1993 and 1997. It is also found that the growth rates of the wages at the bottom of the conditional distribution of wages are higher than those at the top in SOEs. No such patterns for the private sector is found. It is suggested the wage mechanism in the private sector is more market-oriented Classification-JEL: I20, J30 Keywords: uantile regressions, returns to education, wage-experience profile, ownerships Journal: Frontiers of Economics in China Pages: 114-136 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0006-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:114-136 Template-Type: ReDIF-Article 1.0 Author-Name: LUO Chuliang Author-Email: luocl2002@163.com Author-Workplace-Name: Institute of Economics, Chinese Academy of Social Sciences, Beijing 100836, China Title: Precautionary motivation and consumption insurance: Empirical analysis of household consumption behavior in rural China Abstract: Based on a household survey in rural China, this paper discusses parameters such as precautionary motive, excess sensitivity, consumption insurance,and inter-temporal substitution in the household consumption function in rural China. The conclusions of the paper indicate that there is a significant precautionary motive in household consumption in rural China, but the function of consumption insurance is very limited, and the consumption is also excessively sensitive to the income change. Such parameters are different among consumers within different groups. Classification-JEL: C2, D1, E2, O18 Keywords: rural China, precautionary motive, excess sensitivity, consumption insurance Journal: Frontiers of Economics in China Pages: 137-150 Volume: 2 Issue: 1 Year: 2007 Month: March File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0007-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:1:p:137-150 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Yulu Author-Workplace-Name: School of Finance, Renmin University of China, Beijing 100872, China Author-Name: WANG Fang Author-Email: wangfang@sfruc.edu.cn Author-Workplace-Name: School of Finance, Renmin University of China, Beijing 100872, China Title: Economic structural reform and China's financial security —Issues, logic and countermeasures Abstract: The authors believe that the financial operation based on the issuance of paper money in excess of economic capacity resulting from dependence on the state investment is the central manifestation of factors of China's financial insecurity. The financial support for the economic reform, the financial reform and the impact of globalization constitute the major logic of its formation. The fundamentals to safeguard financial security lie in the persistence of the state's comprehensive development strategy, so as to maintain long-term accumulation of the state's net wealth and the stability of faith in markets. Classification-JEL: E6, E44 Keywords: financial security, economic reform, financial reform, economic globalization Journal: Frontiers of Economics in China Pages: 151-168 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0008-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:151-168 Template-Type: ReDIF-Article 1.0 Author-Name: ZHOU Tianyong Author-Email: zhouty@ccps.gov.cn Author-Workplace-Name: The Party School of the Central Committee of the Communist Party of China, Beijing 100091, China Title: Institutional causes for the slowing transition, unemployment and unequal distribution Abstract: Usually 65%-80% of the employment can be taken by small-and-medium-sized enterprises in a country. The more small-and-medium-sized enterprises are active in the economy, the higher proportion of the middle income classes in the population, and the lower proportion of the poor people caused by unemployment and under-employment. Therefore, without changing the policy inclination to support gigantic or large companies we cannot solve the problem of surplus on labor force, urban unemployment and gap of income distribution. Now we may face the danger of developing into the Latin-America trap . At present we should focus on institutional reform of the government and promote the development of small-and-medium-sized enterprises. Classification-JEL: J5, O11 Keywords: small-and-medium-sized enterprises, governmental management, cost and penalty, unequal income distribution Journal: Frontiers of Economics in China Pages: 169-186 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0009-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:169-186 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Zhongchang Author-Email: czcmx@cqu.edu.cn Author-Workplace-Name: College of Trade and Public Administration, Chongqing University, Chongqing 400030, China Author-Name: WU Yongqiu Author-Workplace-Name: College of Trade and Public Administration, Chongqing University, Chongqing 400030, China Title: The relationship between education and employment: A theoretical analysis and empirical test Abstract: In this paper, we divide the process of educational development into two aspects: the change in educational structure and the expansion of educational scale. Based on this hypothesis, we analyze the relationships between each of the two aspects and employment respectively. In this paper, the factors and the transmission mechanism of the influence that education has on employment are also explained. Then, the theoretical models of the relationship between education and employment are built up. Finally, we use the empirical data collected in China to test the theoretical models and give explanations to the status quo of the unemployment structure within various educational levels. It suggests that: the development of education in China at present is beneficial to the increase in the employment rate, the increase in the proportion of the laborers with junior school education has negative effects on employment, and the development of higher education creates positive effects on the employment, but no evidence shows any significant correlation between the proportion of the laborers with senior high school education and the unemployment rate. Classification-JEL: J21, J64, I29 Keywords: educational structure, educational scale, supply and demand structure, unemployment rate Journal: Frontiers of Economics in China Pages: 187-211 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0010-4 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:187-211 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Weiping Author-Email: cwp1976@yahoo.com.cn Author-Workplace-Name: School of Agricultural Economics and Rural Development, Renmin University of China, Beijing 100872, China Author-Name: DING Ying Author-Email: dymeicn@yahoo.com.cn Author-Workplace-Name: Graduate School of Economics, Osaka University, Osaka 560-C8531, Japan Title: Total Factor Productivity in Chinese agriculture: The role of infrastructure Abstract: Graduate School of Economics, Osaka University, Osaka 560-C8531, Japan Classification-JEL: Q18 Keywords: agriculture, bean, China, maize, Malmquist index, productivity, rice, technology, wheat Journal: Frontiers of Economics in China Pages: 212-223 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0011-3 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:212-223 Template-Type: ReDIF-Article 1.0 Author-Name: LÜ Jian Author-Email: ljnankai@yahoo.com.cn Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Title: Empirical study on the infl uence of RMB exchange rate misalignment on China's export —Based on the perspective of dualistic economic structure Abstract: Using data from 1978 2005, this paper estimates RMB equilibrium exchange rate and misalignment respectively, and uses Engle-Granger (E-G) two-step method, error correction model to analyze the influence of RMB exchange rate misalignment on China's export. Because China is the economic transitional country with the character of dualistic economic structure, this paper introduces a control variant into the model which is the gap between agriculture and industry contribution to GDP. Conclusion shows that this model is more credible and stable. There is an obvious cointegration between China's export and RMB exchange rate misalignment, real effective exchange rate, domestic GDP and foreign weighted average GDP. RMB exchange rate misalignment has an obvious negative influence on China's export, but it has self-corrected dynamic mechanism. Then using binary Logit model, this paper concludes that the bigger RMB underestimated misalignment is, the bigger net export probability is, which is good for export. The bigger RMB overestimated misalignment is, the smaller net export probability is, which is bad for export. Classification-JEL: E6,F31 Keywords: RMB exchange rate misalignment, equilibrium exchange rate, China's export, dualistic economic structure Journal: Frontiers of Economics in China Pages: 224-236 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0012-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:224-236 Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Henglong Author-Email: hlzhang@shu.edu.cn Author-Workplace-Name: China Research Center for Government Effi ciency, Shanghai University, Shanghai 201800, China Author-Name: CHEN Xian Author-Workplace-Name: School of International Business & Management, Shanghai University, Shanghai 201800, China Title: Fiscal competition and the structure of local public expenditure in China Abstract: This article examines the impact of intergovernmental fiscal competition on local public expenditure in China under current performance assessment system in which GDP is a critical factor. First, we present the assignment of public goods and tax burden and the share of foreign direct investment (FDI) of 30 provinces, and we find that current fiscal competition in China has taken the form of public expenditure improvement accompanied by preferential tax policies. Second, we regress the share of FDI on different components of provincial public expenditure, and find that the share of FDI is correlated negatively with the public service, tax burden and health care service while positively with infrastructure development. Therefore, FDI-based infrastructural investment crowds out public services investment, which fails to support the view that fiscal competition improves social welfares. Classification-JEL: O53,P35 Keywords: intergovernmental fiscal competition, FDI, public goods Journal: Frontiers of Economics in China Pages: 237-249 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0013-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:237-249 Template-Type: ReDIF-Article 1.0 Author-Name: YU Miaojie Author-Email: mjyu@ccer.pku.edu.cn Author-Workplace-Name: China Center for Economic Research (CCER), Peking University, Beijing 100872, China Title: Political competition and bilateral direct investments Abstract: This paper investigates a basic question about the international political economy why is international trade not free? To answer this question, we modified Grossman and Helpman (1994) by considering that interest lobbies make political contributions to both the incumbent government and the political challenger in order to influence the incumbent government's choice of trade policy. By examining the contribution schedules under a framework of bilateral direct investments, we find that the modified Ramsey rule still holds under our setting Classification-JEL: F13 Keywords: tariffs, political contributions, bilateral direct investments Journal: Frontiers of Economics in China Pages: 250-274 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0014-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:250-274 Template-Type: ReDIF-Article 1.0 Author-Name: WANG Liping Author-Email: 007wangliping@163.com Author-Workplace-Name: School of Economics and City Management, Shandong Economic University, Jinan 250014, China Title: Chinese consumption and asset returns: An analysis across income groups Abstract: The equity premium puzzle is found during the test of the Consumption-based Capital Asset Pricing Model (CCAPM) with aggregate consumption data. Because of income disparity, many consumers lack financial assets to intertemporally allocate their consumptions under income constraints. Thus, it is likely to lead to a specification error by employing aggregate consumption data to test the CCAPM. This paper examines the impacts of the economically constrained (low-income) consumers and unconstrained (high-income) consumers on the CCAPM using urban consumption expenditures in China delineated by consumer income, and tests the income constraint hypothesis. The empirical results show that the CCAPM is not more consistent with the consumption pattern of the higher-income consumers. Including the income constraint into the analyses of the consumption and asset returns does not unravel the equity premium puzzle. Classification-JEL: G12 Keywords: consumption, asset returns, income constraint Journal: Frontiers of Economics in China Pages: 275-288 Volume: 2 Issue: 2 Year: 2007 Month: June File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0015-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:275-288 Template-Type: ReDIF-Article 1.0 Author-Name: DING Jihong Author-Email: jding@nankai.edu.cn Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Author-Name: ZHU Minglai Author-Email: zhuml@nankai.edu.cn Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Title: Welfare effects of public health insurance reform: The case of urban China Abstract: This paper evaluates Chinese public health insurance reform enforced since 1998 in terms of its welfare effects. We evaluate China health insurance reform since 1998 using the China Health and Nutrition Surveys (CHNS) data with relevant econometric models. The results of empirical studies show that the public health insurance status has significant impact on medical service utilization and expenditure. The reform reduces the positive effect of public health insurance on medical service utilization, meaning the utilization gap is narrowed after the reform. However, the empirical studies find that the medical expenditure growth of the sample individuals in urban China has not been controlled after the Basic Medical Insurance (BMI) program even if a new co-payment is enforced. Two main reasons for this failure might be the rising cost of medical service and physician's severe moral hazard, while both of them come from no managed care mechanism for medical service providers in China. Classification-JEL: I18 Keywords: health insurance reform, medical service expenditure, medical service utilization Journal: Frontiers of Economics in China Pages: 289-323 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0016-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:289-323 Template-Type: ReDIF-Article 1.0 Author-Name: WANG Zheng Author-Email: ralwang@gmail.com Author-Workplace-Name: College of Economics, Zhejiang University, Hangzhou 310027, China Author-Name: ZHENG Jinghai Author-Workplace-Name: Department of Economics, Goteborg University, SE 405 30 Goteborg, Sweden Author-Name: SHI Jinchuan Author-Workplace-Name: Center for Research of Private Economy, Zhejiang University, Hangzhou 310027, China Title: The performance of industrial productivity across regions of China: Structural differences, institutional shocks and dynamic characteristics Abstract: This paper is dedicated to probing into the dynamic performances of industrial productivity across regions of transitional China, using the panel data of provincial level. Based on the approach by Kumbhakar (2000), TFP (total factor productivity) growth is decomposed into four components. The main results are as follows. First, since 1988, the industrial TFP growth has been commonly accelerated across regions, with a rising technical change rate as the principal impetus. Second, meanwhile, technical efficiency and factors' allocative efficiency are deteriorated with scale efficiency switching from being retrogressive to being progressive. Third, although the SOE (state-owned enterprise) reform in the late 1990s has constituted a common shock to the industrial productivity, the eastern area with relatively few SOEs suffers the least from this policy enforcement. Fourth, by exploring the sources of productivity differences, we further confirm that the institutional shock launched by SOE reform in the late 1990s is crucial for the enhancement of scale effects as well as the temporarily rapid decline of factors' allocative efficiency; in addition, the educational level of the labor-force and the share of non-SOEs in the industrial output contribute positively to the acceleration of technical change and the improvement of allocative efficiency. The economic transition, accompanied by gradual institutional reforms, is reshaping the map of regional industrialization through various channels. Classification-JEL: E230, O140, O470 Keywords: transition, industry, productivity, TFP, SOE reform Journal: Frontiers of Economics in China Pages: 324-345 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0017-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:324-345 Template-Type: ReDIF-Article 1.0 Author-Name: FAN Jianyong Author-Email: jyfan0393@163.com Author-Workplace-Name: Institute of World Economy, Fudan University, Shanghai 200433, China Title: Industrial agglomeration and difference of regional productivity Abstract: Locally increasing returns is the source of industrial agglomeration, and it improves regional labour productivity and drives up regional inequality. Using data of 261 cities in 2004 in China, I find that the estimated elasticity of (average) labor productivity with respect to employment density is about 8.8%, compared with 5% in the USA and 4.5% in the EU. Further, I find that the difference of agglomeration effects among provinces exists two cases: insignificant difference and significant difference. However, under the polarization of industrial location, both two cases enlarge the inequality of labor productivity among provinces, and drive up the divergence of regional income. Classification-JEL: J610, R190, R230 Keywords: industrial agglomeration, labor productivity, locally increasing returns Journal: Frontiers of Economics in China Pages: 346-361 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0018-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:346-361 Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Xiaojing Author-Email: zhang_xj@cass.org.cn Author-Workplace-Name: Institute of Economics, Chinese Academy of Social Sciences, Beijing 100836, China Author-Name: WANG Hongju Author-Workplace-Name: Institute of Economics, Chinese Academy of Social Sciences, Beijing 100836, China Author-Name: CHANG Xin Author-Workplace-Name: Institute of Economics, Chinese Academy of Social Sciences, Beijing 100836, China Title: Growth imbalance and government responsibility: From the perspective of social spending Abstract: There exists a kind of growth imbalance in China's current development process, which is essentially characterized by the imbalance between the nation's wealth and the people's welfare. This paper points out that growth imbalance results mostly from insufficient government social spending on people's welfare. Consequently, the government should shoulder the basic responsibility for the provision of education, health and social security, quicken the transformation of government expenditure structure and increase the share of social spending, in order to improve the people's welfare and achieve the rebalancing of growth. The increase in social spending can also promote the accumulation of human capital, which will help the conversion of economic growth pattern and the realization of sustainable and healthy economic development. Classification-JEL: H510, H520, H530, E620 Keywords: growth imbalance, government responsibility, social spending, human capital accumulation Journal: Frontiers of Economics in China Pages: 362-387 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0019-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:362-387 Template-Type: ReDIF-Article 1.0 Author-Name: YING Weiwei Author-Email: yingweiwei@263.net Author-Workplace-Name: School of International Business, Beijing Foreign Studies University, Beijing 100089, China Title: Does macro-economy have any effect on firm investment-cash flow sensitivities? —An empirical study based on panel data, 1993–2004 Abstract: We conduct an empirical study on Chinese listed firms' investment-cash flow sensitivities in different stages of the macroeconomic cycle during 1993–2004, and find that macro-economy has a significant effect on investment-cash flow sensitivities. When economic slowdown occurred between 1998 and 2001, sample firms reduced working capital substantially to maintain some necessary investment level of fixed assets, that is, firms stabilized fixed assets investment by adjusting working capital. However, the sensitivity coefficients of fixed assets investment to cash or sales revenue were not systematically higher in the depressed stage than in the booming stage. Classification-JEL: E22 Keywords: macro-economy, investment-cash flow sensitivities, panel data Journal: Frontiers of Economics in China Pages: 388-403 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0020-2 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:388-403 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Jiyong Author-Email: cjyhubei@163.com Author-Workplace-Name: Department of World Economics, Economics and Management School, Wuhan University, Wuhan 430072, China Author-Name: LIU Wei Author-Workplace-Name: Department of World Economics, Economics and Management School, Wuhan University, Wuhan 430072, China Title: An empirical study on “the US-China trade deficit produced by FDI” Abstract: This article makes an empirical study on the magnifying effect produced by foreign direct investment (hereafter called as FDI) on the US-China trade deficit through co-integration analysis and error-correction modeling. By combining the empirical results, we give out our own opinion that the expansion of the US-China trade deficit is supposed to partly ascribe to the fact that processed industry is the main path of FDI and to Counter sales and trade diversion which are produced by exports on reproduced production by foreign enterprises in China. On the above-mentioned basis, this article concludes that in order to reduce the US-China trade deficit effectively, we are supposed to expand our domestic demand, perfect our inviting-investment policies, implement FDI in China and quicken up the going out  of our enterprises. Classification-JEL: F14 Keywords: FDI, the US-China trade deficit, trade diversion, processed trade Journal: Frontiers of Economics in China Pages: 404-423 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0021-1 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:404-423 Template-Type: ReDIF-Article 1.0 Author-Name: KOU Zonglai Author-Email: zlkou@fudan.edu.cn Author-Workplace-Name: China Center for Economic Studies, School of Economics, Fudan University, Shanghai 200433, China Author-Name: ZHANG Jian Author-Workplace-Name: School of Economics, Fudan University, Shanghai 200433, China Title: Endogenous licensing in cumulative innovation Abstract: This paper analyzes the endogeneity of licensing arrangements in cost-reducing cumulative innovation. There exists the following results. First, for the first-generation patentee, ex post licensing matters for rent extraction while ex ante licensing matters for efficiency. Second, if the second-generation innovator does not exit, then the firms' profits as well as social welfare are all irrelevant to whether ex ante licensing is allowed. Third, costly litigation can occur on the equilibrium path and its occurrence is also irrelevant to ex ante licensing. Interestingly, the conditional probability of the first-generation patentee winning litigation first decreases and then increases in patent breadth. Fourth, optimal patent breadth depends on the tradeoff between litigation costs and antitrust effect. Classification-JEL: D23, K41, O34 Keywords: cumulative innovation, patent breadth, ex post licensing, ex ante licensing, perfect bayesian equilibrium Journal: Frontiers of Economics in China Pages: 424-457 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0022-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:424-457 Template-Type: ReDIF-Article 1.0 Author-Name: XIAO Junji Author-Email: jxiao@mail.shufe.edu.cn Author-Workplace-Name: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China Title: A method for analyzing strategic product launch Abstract: This paper proposes a method to analyze how the manufacturers make product launch decisions in a multi-product oligopoly market, and how the heterogeneity in their products affects the manufacturers' decisions on model launch and withdrawal. Classification-JEL: C10, L13, L63 Keywords: product launch, dynamic model, heterogeneous products Journal: Frontiers of Economics in China Pages: 458-464 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0023-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:458-464 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Weiping Author-Email: cwp1976@yahoo.com.cn Author-Workplace-Name: School of Agricultural Economics and Rural Development, Renmin University of China, Beijing 100872, China Author-Name: DING Ying Author-Email: dymeicn@yahoo.com.cn Author-Workplace-Name: Graduate School of Economics, Osaka University, Osaka 560-C8531, Japan Title: ERRATUM Total Factor Productivity in Chinese agriculture: The role of infrastructure Abstract: Classification-JEL: Keywords: Journal: Frontiers of Economics in China Pages: 465 Volume: 2 Issue: 3 Year: 2007 Month: September File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0024-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:465 Template-Type: ReDIF-Article 1.0 Author-Name: YAO Yang Author-Email: yyao@ccer.pku.edu.cn Author-Workplace-Name: China Center of Economic Research, Peking University, Beijing 100871, China Author-Name: ZHENG Dongya Author-Workplace-Name: China Center of Economic Research, Peking University, Beijing 100871, China Title: Externalities and development of heavy industry Abstract: In the framework of a dynamic general equilibrium model, this paper studies how vertical externalities affect the development of heavy industry in a developing economy. The model is comprised of an intermediate and a consumer product sector. The production of both types of goods has pecuniary externalities as they are featured by increasing return to scale. However, the production of an intermediate product has an additional advantage to have externalities through its technological linkage with the production of consumer goods. This is related to the nature of the roundabout production of consumer goods: a larger number of intermediate products lead to higher productivity in the production of consumer goods than do more inputs of a fixed number of intermediate products. Therefore, private investment in the intermediate sector is below the social optimal level. Government subsidies can restore the economy to the social optimum, but they become less needed as the consumer sector grows larger and the advantage of the intermediate good sector diminishes. Classification-JEL: D62, O20, O41 Keywords: technological externalities, pecuniary externalities, heavy-industry development strategy Journal: Frontiers of Economics in China Pages: 467-489 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0025-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:467-489 Template-Type: ReDIF-Article 1.0 Author-Name: CHEN Yanbin Author-Email: chenruc@sohu.com Author-Workplace-Name: School of Economics, Renmin University of China, Beijing 100872, China Author-Name: MA Lili Author-Email: whmll@sina.com Author-Workplace-Name: School of Economics and Management, Wuhan University, Wuhan 430072, China Title: Study of the welfare cost of infl ation in China Abstract: Inflation is always an important indicator to measure whether economy is stable and healthy. This paper provides a substantive survey of the research on the welfare cost of inflation, and uses the methods of consumer's surplus and neo-classical general equilibrium models respectively to estimate the welfare cost of inflation in China. The results show that high inflation will cause huge welfare cost in China, so keeping low inflation is beneficial to the entire economic welfare of China. Classification-JEL: E31, E41, E17 Keywords: money, inflation, welfare cost Journal: Frontiers of Economics in China Pages: 490-519 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0026-9 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:490-519 Template-Type: ReDIF-Article 1.0 Author-Name: SONG Bo Author-Workplace-Name: Department of Economics, Nanjing University, Nanjing 210093, China Author-Name: GAO Bo Author-Email: gaobo@nju.edu.cn Author-Workplace-Name: Department of Economics, Nanjing University, Nanjing 210093, China Title: Impact of international capital flows on real estate market: The empirical test in China from 1998 to 2006 Abstract: Taking the inflation into consideration and making use of the quarter data of the actual foreign investment, housing and land prices in China from 1998 to 2006, this paper examines the relationship between housing prices and international capital flows using Error Correction Model (ECM) and Granger causality test. Results show that in the short run, the increase of housing prices attracts the inflow of foreign capitals; in the long run, foreign capitals help to boost the rise of housing prices. Therefore, at present, Chinese government must impose effective restrictions on the flow of foreign capital into the real estate market. Classification-JEL: D4, E44 Keywords: inflation, international capital flows, real estate prices Journal: Frontiers of Economics in China Pages: 520-531 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0027-8 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:520-531 Template-Type: ReDIF-Article 1.0 Author-Name: BAO Qun Author-Email: baoqun@nankai.edu.cn Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Author-Name: YANG Jiayu Author-Workplace-Name: School of Economics, Nankai University, Tianjin 300071, China Title: Does fi nancial development promote international trade? —Evidence from China Abstract: Using China's panel data of 30 provinces during 1990–2003, this paper attempts to explore a possible link between financial development and China's foreign trade. Four indicators are used to identify the role of financial development, which capture both the scale and efficiency feature of China's regional financial development. The effects of other variables are also investigated, including traditional factor endowments, foreign direct investment, infrastructure and institutional quality, etc. In general, the estimation results suggest that financial development has a quantitatively large and robust effect on China's manufactured goods trade, among which the financial efficiency indicators play a more significant role in promoting manufactured goods trade than those scale indicators. Sensitivity estimations show that the effect of financial development on China's total trade essentially differs from that on trade in manufactured goods. Classification-JEL: O16, C23, G20, F14 Keywords: financial development, international trade, manufactured goods, panel data Journal: Frontiers of Economics in China Pages: 532-557 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0028-7 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:532-557 Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Li Author-Email: lzhague@yahoo.com Author-Workplace-Name: Institute of Economics, School of Economics, Nankai University, Tianjin 300071, China Title: Involution or pursuit of profit? —A reassessment of Chinese sericulture during the 1840s–1940s Abstract: With new data and a new methodology, this paper reassesses the forces that led to the rise of Chinese sericulture in the late nineteenth and early twentieth centuries. The study challenges the prevailing view that Chinese peasants switched to sericulture in order to gain a higher aggregate family income at the cost of a lower net income per workday. Based on a case study of Wuxi, the research indicates that until the late 1920s, sericulture had provided peasants not only higher aggregate income, but also higher returns on labor. Peasants were more pulled by higher profit than by high population pressure to switch to sericulture. Classification-JEL: N33, N55 Keywords: involution, incentive, total net family income, net income per workday Journal: Frontiers of Economics in China Pages: 558-593 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0029-6 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:558-593 Template-Type: ReDIF-Article 1.0 Author-Name: GAO Haihong Author-Email: gaohh@cass.org.cn Author-Workplace-Name: Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing 100732, China Title: Optimal currency area: An empirical study on selected East Asian economies Abstract: This paper empirically examines the potential for forming an Optimal Currency Area (OCA) in selected Asian economies, including ASEAN countries, China, Japan and Korea, by testing Generalized Purchasing Power Parity (G-PPP) using Johansen's cointegration approach. We investigate the long-term real exchange rate of six sub-groups of countries in order to find whether they share the common stochastic trend, as in an OCA, predicted by the G-PPP theory. The date set is monthly based between 1994 and 2003. We find that five sub-groups out of the six in total appear to have significant evidence of the existence of OCAs. This finding reflects the fact that those economies are actually highly integrated and interrelated to each other, and the current regional monetary arrangement (such as, the Chiang Mai Initiative (CMI)) is far lagging behind the real economic link in East Asia. Classification-JEL: F36, F31, F41 Keywords: optimal currency area (OCA), generalized purchasing power parity (G-PPP), real exchange rate, East Asian economies Journal: Frontiers of Economics in China Pages: 594-606 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0030-0 File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:594-606 Template-Type: ReDIF-Article 1.0 Author-Name: QIU Bin Author-Email: qiubin@seu.edu.cn Author-Workplace-Name: School of Economics and Management, Southeast University, Nanjing 210096, China Author-Name: TANG Baoqing Author-Workplace-Name: Jiangsu College of Economics and Trade, Nanjing 210007, China Author-Name: SUN Shaoqin Author-Workplace-Name: School of Economics and Management, Nanjing University of Information Science & Technology, Nanjing 210044, China Title: An empirical study on the long-term correlation between international trade and infl ow of Foreign Direct Investment based on Cointegration Theory: Evidence from China Abstract: This paper studies the long-term relationship between FDI and imports and exports through evidence from China by using cointegration technology, and the Granger causality test shows that FDI had an obvious effect on imports and exports activities of foreign firms, and in the meantime, the imports and exports of foreign firms greatly promoted FDI. However, there is not a stable equilibrium between FDI and international trade in the long run for all firms in China. This paper provides some explanations for the possible reasons that cause the above difference in estimation results from the perspectives of both location and industry factors. Classification-JEL: F21, C82 Keywords: international trade, FDI, long-term equilibrium, cointegration Journal: Frontiers of Economics in China Pages: 607-622 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0031-z File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:607-622 Template-Type: ReDIF-Article 1.0 Author-Name: ZHANG Weifu Author-Email: cwf-01@163.com Author-Workplace-Name: School of International Business & Economics, Nanjing University of Finance & Economics, Nanjing 210046, China Author-Name: ZHU Zhigang Author-Workplace-Name: School of International Business & Economics, Nanjing University of Finance & Economics, Nanjing 210046, China Title: Empirical analysis on the effect of economic opening on China's economic growth Abstract: Based on an adjusted Solow economic growth model, using econometric tools such as cointegration test and Granger causality test, taking the economic factors such as foreign trade and foreign investment into account, this paper makes regression analysis on the effect of economic opening on China's economic growth by using the data from 1985 to 2004. The analysis indicates that the domestic capital input is still the primary element that promotes China's economic growth, by contrast, the effect of foreign trade and foreign investment is faint. It is a bidirectional causality between foreign trade and economic growth, and the adjusting velocity of trade is larger than the foreign direct investment on the balance of the China's long-time economic growth. Classification-JEL: F21, O1 Keywords: foreign trade, FDI, economic growth, Granger causality test Journal: Frontiers of Economics in China Pages: 623-643 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0032-y File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:623-643 Template-Type: ReDIF-Article 1.0 Author-Name: PI Jiancai Author-Email: jiancaipi@hotmail.com Author-Workplace-Name: China Center for Economic Research, Peking University, Beijing 100871, China Title: Fairness compatibility constraints and collective actions Abstract: This paper extends the work of Zhu Xianchen and Li Yulian (2007) by introducing the fairness compatibility constraint. Our work strengthens the explanatory power of their model. Whether a collective action can be realized depends not only on the organizer and followers' individual rationality constraints, but also on their fairness compatibility constraints. Collective actions that meet the organizer's individual rationality constraint but do not meet his fairness compatibility constraints cannot be realized. Furthermore, free-riders play a destructive role, which should not be ignored. Classification-JEL: A13, D63, C70, H41 Keywords: collective action, heterogeneity, individual rationality constraint, fairness compatibility constraint Journal: Frontiers of Economics in China Pages: 644-652 Volume: 2 Issue: 4 Year: 2007 Month: December File-URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0033-x File-Format: Application/pdf Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:644-652