Issues and Country Experiences
Edited by Jesus Felipe
Chapter 8: Industrial diversification in the People’s Republic of China
Until about 1980, the People’s Republic of China (PRC) was a closed, centrally planned economy. It has since become a vibrant, open, market-oriented economy that produces and exports a wide range of labor-and capital-intensive goods. Quite rightly, the PRC is regarded as the ‘world’s factory.’ At first glance, this expanding product range suggests that its economic structure has become more diversified, lending support to the findings of the influential study by Imbs and Wacziarg (2003), which argues that diversification tends to occur in the early stages of development. Using data from the China Industrial Census 1995 and the China Economic Census 2004, this chapter investigates whether diversification has occurred in the early stages of the PRC’s development. We find, surprisingly, that industrial production has actually become increasingly specialized, with the economy becoming less diversified at both the national and regional levels during 1995–2004.
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