The Impact of Self-Sufficiency on Regional Industrial Growth and Productivity in Post-1949 China: the Case of Jiangsu Province (Trade, Finance).

China in the 1980s is a major world producer of manufactured goods and , contrary to many other developing countries, is not greatly dependent on international markets and is virtually free of foreign debt. Yet, China's post-1949 development relied on an import substitution industrialization strategy (ISI) much like that of many other countries. Although the political reasons for national leaders to desire domestic industrial capabilities are compelling, the economic success of many countries' ISI strategies has been mixed at best. The purpose of this study is to investigate the impact of China's version of ISI betwen 1949 and 1983 on industrial growth and productivity in Jiangsu Province, as a case study of development within China's socialist planned economy. The study utilizes, and makes available, new provincial economic data. An inter-provincial balance-of-trade framework is used to examine the implementation of regional policies and resource flows between the central government and Jiangsu Province. A growth accounting, production function approach is used to measure the contributions of inputs and productivity to increases in industrial output. This investigation shows that measures of Jiangsu's trade and investment reflect national development policies that did not favor investment in relatively developed Jiangsu and discouraged inter-provincial exchange. Industrialization in Jiangsu Province was nonetheless substantial, but due largely to increases in capital and labor inputs; increases in total factor productivity resulted mainly from decreases in the degree of underutilization of existing capacity. Periods when international and regional self-sufficiency policies were implemented tended to be characterized by relatively high rates of industrial growth but low productivity growth, suggesting that such policies stimulated growth in Jiangsu through local investment but at relatively high input costs. Finally, evidence is presented that suggests Jiangsu lessened the negative factors of China's ISI policies by maintaining some intra-provincial specialization and by developing substantial rural industry.PhDEconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/161451/1/8712194.pd