Growth and Convergence: The case of China

Growth and Convergence: The Case of China Since the initiation of economic reforms in 1978, China has become one of the world’s fast-growing economies. The rapid growth, however, has not been shared equally across the different regions in China. The prominent feature of substantial differences in incomes and growth rates across the different Chinese regions has attracted the attention of many researchers. This book focuses on issues related to economic growth and convergence across the Chinese regions over the past three decades. The book has eight chapters. Apart from an introduction chapter and a concluding chapter, all the other chapters each deal with some certain aspects of the central issue of regional growth and convergence across China over the past three decades. The whole book is organized as follows. Chapter 1 provides an introduction to the basic issues involved in this book. Chapter 2 tests economic growth and convergence across 31 Chinese provinces during 1981-2005, based on the theoretical framework of the Solow growth model. Chapter 3 investigates the relationship between openness to foreign economic activities, such as foreign trade and foreign direct investment, and the regional economic growth in the case of China during 1981-2005. Chapter 4, based on data of 31 Chinese provinces over the period 1980-2004, presents new evidence on the effects of structural shocks and structural transformation on growth and convergence among the Chinese regions. Chapter 5, by building up an empirical model that takes account of different potential effects of foreign direct investment, focuses on the impacts of foreign direct investment on China’s regional economic performance and growth. Chapter 6 reconsiders the growth and convergence problem of the Chinese regions in an alternative theoretical framework with endogenous saving behavior and capital mobility across regions. Chapter 7, by building up a theoretical model concerning comparative advantage and transaction efficiency, focuses on one of the potential mechanisms through which China achieves its fast economic growth over the past few decades. Chapter 8 concludes the book by summarizing the results from the previous chapters and suggesting directions for further studies.

Productivity of the suffixes -ness and -ity in 17th-century English letters : A sociolinguistic approach

Tässä työssä tutkitaan englannin kielen substantiivijohtimien -ness ja -ity produktiivisuutta 1600-luvulla kirjoitetuissa kirjeissä. Näitä lähes synonyymisiä johtimia käytetään yleensä merkitykseltään abstraktien substantiivien muodostamiseen adjektiiveista (esim. productive 'produktiivinen' > productiveness tai productivity 'produktiivisuus'). Johtimista -ity on lainautunut englantiin ranskasta ja myöhemmin myös latinasta; se on sekä fonologialtaan että semantiikaltaan läpinäkymättömämpi kuin kotoperäinen -ness. Lisäksi -ity-johdinta on käytetty enimmäkseen formaaleissa tilanteissa ja tieteellisissä teksteissä, kun taas -ness on ollut yleiskäyttöisempi. Tutkielman lähestymistapa on sosiolingvistinen: oletetaan, että johtimien produktiivisuus (eli valmius muodostaa uusia johdoksia) voi vaihdella eri sosiaaliryhmissä. Sosiolingvistiikkaa ei ole aiemmin juurikaan sovellettu produktiivisuuden tutkimiseen. Tutkimusaineistona on Helsingin yliopiston VARIENG-tutkimusyksikön laatima Corpus of Early English Correspondence, varhaisista englanninkielisistä kirjeistä koostuva korpus eli elektroninen tekstikokoelma, joka on suunniteltu historiallisen sosiolingvistiikan tarpeisiin. Korpuksen 1600-luvun kirjeitten yhteenlaskettu pituus on noin 1,4 miljoonaa sanaa, ja ne on kirjoitettu vuosina 1600-1681. Tutkielman tärkeimpänä produktiivisuusmittarina käytetään johtimien avulla muodostettujen eri sanojen eli tyyppien lukumäärää. Hypoteesina on, että -ity-tyyppien määrä on keskimääräistä pienempi huonosti koulutettujen sosiaaliryhmien kirjeissä. Näitä olivat 1600-luvulla naiset sekä alhaisimmat yhteiskuntaryhmät, kuten talonpojat ja käsityöläiset. Johtimen -ness tyyppimäärissä ei odoteta esiintyvän sosiolingvististä variaatiota. Tutkielmassa käsitellään myös tyyppimäärien vertailuun liittyviä metodologisia ongelmia. Koska vaikkapa naisilta ja miehiltä on eri määrä dataa, ei heidän tyyppimääriään voida suoraan verrata keskenään. Esimerkiksi tyyppimäärien normalisointi tuhatta sanaa kohti ei myöskään ole mahdollista, koska tyyppien lukumäärä ei kasva lineaarisesti korpuksen kasvaessa. Tutkielmassa esitetään kielitieteessä harvoin käytetty tilastotieteellinen menetelmä, jonka avulla korpuksen eri osista saatuja tyyppimääriä voidaan verrata koko korpukseen ja testata, ovatko ne tilastollisesti merkittävän pieniä tai suuria. Toisin kuin monet yleisemmät menetelmät, tämä tyyppikertymiin ja permutaatiotesteihin perustuva metodi ei vaadi yksinkertaistavien oletuksien tekemistä. Tutkimustulokset vahvistavat hypoteesin oikeaksi: naisten -ity-tyyppien lukumäärä on tilastollisesti merkittävän alhainen, kun taas -ness-tyyppien määrissä ei ole tilastollisesti merkittäviä eroja. Alhaisimpien yhteiskuntaryhmien osalta tuloksia ei saada, koska niiltä on korpuksessa liian vähän dataa. Analyysissä paljastuu myös yllättävä eroavaisuus: korpuksen ajallisesti ensimmäisessä puoliskossa (1600-1639) on merkittävän vähän -ity-tyyppejä. Tämä voidaan tulkita kielelliseksi muutokseksi: -ity-johtimen produktiivisuus kasvaa kirjeissä 1600-luvun aikana. Saattaa olla, että johtimen produktiivisuus on ensin kasvanut formaalimmissa tekstilajeissa, joista lisääntynyt käyttö on sitten levinnyt myös kirjeisiin, ehkäpä 1640-luvun sisällissodan synnyttämien kontaktiverkostojen siivittämänä. Tuloksien perusteella voidaan sanoa, että sosiolingvistinen vaihtelu on merkittävä tekijä ainakin joittenkin johtimien produktiivisuudessa, joten vaihtelua on syytä tutkia enemmänkin. Tutkimuksessa käytetty metodi mahdollistaa osakorpuksien tyyppimäärien luotettavan vertailun melko pienissäkin korpuksissa, joten se soveltuu hyvin niin historialliseen kielitieteeseen kuin sosiolingvistiikkaankin.

Land leasing, land degradation and agricultural productivity in Finland

This study analysed whether the land tenure insecurity problem has led to a decline in long-term land improvements (liming and phosphorus fertilization) under the Common Agricultural Policy (CAP) and Nordic production conditions in European Union (EU) countries such as Finland. The results suggests that under traditional cash lease contracts, which are encouraged by the existing land leasing regulations and agricultural subsidy programs, the land tenure insecurity problem on leased land reduces land improvements that have a long pay-back period. In particular, soil pH was found to be significantly lower on land cultivated under a lease contract compared to land owned by the farmers themselves. The results also indicate that land improvements could not be reversed by land markets, because land owners would otherwise have carried out land improvements even if not farming by themselves. To reveal the causality between land tenure and land improvements, the dynamic optimisation problem was solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represented Finnish soil quality and production conditions. The decision rules were solved for alternative likelihood scenarios over the continuation of the fixed-term lease contract. The results suggest that as the probability of non-renewal of the lease contract increases, farmers quickly reduce investments in irreversible land improvements and, thereafter, yields gradually decline. The simulations highlighted the observed trends of a decline in land improvements on land parcels that are cultivated under lease contracts. Land tenure has resulted in the neglect of land improvement in Finland. This study aimed to analyze whether these challenges could be resolved by a tax policy that encourages land sales. Using Finnish data, real estate tax and a temporal relaxation on the taxation of capital gains showed some potential for the restructuring of land ownership. Potential sellers who could not be revealed by traditional logit models were identified with the latent class approach. Those landowners with an intention to sell even without a policy change were sensitive to temporal relaxation in the taxation of capital gains. In the long term, productivity and especially productivity growth are necessary conditions for the survival of farms and the food industry in Finland. Technical progress was found to drive the increase in productivity. The scale had only a moderate effect and for the whole study period (1976–2006) the effect was close to zero. Total factor productivity (TFP) increased, depending on the model, by 0.6–1.7% per year. The results demonstrated that the increase in productivity was hindered by the policy changes introduced in 1995. It is also evidenced that the increase in land leasing is connected to these policy changes. Land institutions and land tenure questions are essential in agricultural and rural policies on all levels, from local to international. Land ownership and land titles are commonly tied to fundamental political, economic and social questions. A fair resolution calls for innovative and new solutions both on national and international levels. However, this seems to be a problem when considering the application of EU regulations to member states inheriting divergent landownership structures and farming cultures. The contribution of this study is in describing the consequences of fitting EU agricultural policy to Finnish agricultural land tenure conditions and heritage.

Components of productivity growth in Finnish agriculture

The objective was to measure productivity growth and its components in Finnish agriculture, especially in dairy farming. The objective was also to compare different methods and models - both parametric (stochastic frontier analysis) and non-parametric (data envelopment analysis) - in estimating the components of productivity growth and the sensitivity of results with respect to different approaches. The parametric approach was also applied in the investigation of various aspects of heterogeneity. A common feature of the first three of five articles is that they concentrate empirically on technical change, technical efficiency change and the scale effect, mainly on the basis of the decompositions of Malmquist productivity index. The last two articles explore an intermediate route between the Fisher and Malmquist productivity indices and develop a detailed but meaningful decomposition for the Fisher index, including also empirical applications. Distance functions play a central role in the decomposition of Malmquist and Fisher productivity indices. Three panel data sets from 1990s have been applied in the study. The common feature of all data used is that they cover the periods before and after Finnish EU accession. Another common feature is that the analysis mainly concentrates on dairy farms or their roughage production systems. Productivity growth on Finnish dairy farms was relatively slow in the 1990s: approximately one percent per year, independent of the method used. Despite considerable annual variation, productivity growth seems to have accelerated towards the end of the period. There was a slowdown in the mid-1990s at the time of EU accession. No clear immediate effects of EU accession with respect to technical efficiency could be observed. Technical change has been the main contributor to productivity growth on dairy farms. However, average technical efficiency often showed a declining trend, meaning that the deviations from the best practice frontier are increasing over time. This suggests different paths of adjustment at the farm level. However, different methods to some extent provide different results, especially for the sub-components of productivity growth. In most analyses on dairy farms the scale effect on productivity growth was minor. A positive scale effect would be important for improving the competitiveness of Finnish agriculture through increasing farm size. This small effect may also be related to the structure of agriculture and to the allocation of investments to specific groups of farms during the research period. The result may also indicate that the utilization of scale economies faces special constraints in Finnish conditions. However, the analysis of a sample of all types of farms suggested a more considerable scale effect than the analysis on dairy farms.

Intensity, productivity and efficiency in agriculture in Finland and implications for N and P fertiliser management

The purpose of this study was to evaluate intensity, productivity and efficiency in agriculture in Finland and show implications for N and P fertiliser management. Environmental concerns relating to agricultural production have been and still are focused on arguments about policies that affect agriculture. These policies constrain production while demand for agricultural products such as food, fibre and energy continuously increase. Therefore the importance of increasing productivity is a great challenge to agriculture. Over the last decades producers have experienced several large changes in the production environment such as the policy reform when Finland joined the EU 1995. Other and market changes occurred with the further EU enlargement with neighbouring countries in 2005 and with the decoupling of supports over the 2006-2007 period. Decreasing prices a decreased number of farmers and decreased profitability in agricultural production have resulted from these changes and constraints and of technological development. It is known that the accession to the EU 1995 would herald changes in agriculture. Especially of interest was how the sudden changes in prices of commodities on especially those of cereals, decreased by 60%, would influence agricultural production. The knowledge of properties of the production function increased in importance as a consequence of price changes. A research on the economic instruments to regulate productions was carried out and combined with earlier studies in paper V. In paper I the objective was to compare two different technologies, the conventional farming and the organic farming, determine differences in productivity and technical efficiency. In addition input specific or environmental efficiencies were analysed. The heterogeneity of agricultural soils and its implications were analysed in article II. In study III the determinants of technical inefficiency were analysed. The aspects and possible effects of the instability in policies due to a partial decoupling of production factors and products were studied in paper IV. Consequently connection between technical efficiency based on the turnover and the sales return was analysed in this study. Simple economic instruments such as fertiliser taxes have a direct effect on fertiliser consumption and indirectly increase the value of organic fertilisers. However, fertiliser taxes, do not fully address the N and P management problems adequately and are therefore not suitable for nutrient management improvements in general. Productivity of organic farms is lower on average than conventional farms and the difference increases when looking at selling returns only. The organic sector needs more research and development on productivity. Livestock density in organic farming increases productivity, however, there is an upper limit to livestock densities on organic farms and therefore nutrient on organic farms are also limited. Soil factors affects phosphorous and nitrogen efficiency. Soils like sand and silt have lower input specific overall efficiency for nutrients N and P. Special attention is needed for the management on these soils. Clay soils and soils with moderate clay content have higher efficiency. Soil heterogeneity is cause for an unavoidable inefficiency in agriculture.

Boundedness and convergence of singular integrals on fractal type sets

The topic of this dissertation lies in the intersection of harmonic analysis and fractal geometry. We particulary consider singular integrals in Euclidean spaces with respect to general measures, and we study how the geometric structure of the measures affects certain analytic properties of the operators. The thesis consists of three research articles and an overview. In the first article we construct singular integral operators on lower dimensional Sierpinski gaskets associated with homogeneous Calderón-Zygmund kernels. While these operators are bounded their principal values fail to exist almost everywhere. Conformal iterated function systems generate a broad range of fractal sets. In the second article we prove that many of these limit sets are porous in a very strong sense, by showing that they contain holes spread in every direction. In the following we connect these results with singular integrals. We exploit the fractal structure of these limit sets, in order to establish that singular integrals associated with very general kernels converge weakly. Boundedness questions consist a central topic of investigation in the theory of singular integrals. In the third article we study singular integrals of different measures. We prove a very general boundedness result in the case where the two underlying measures are separated by a Lipshitz graph. As a consequence we show that a certain weak convergence holds for a large class of singular integrals.

Essays on Illegal Activities, Institutions and Economic Growth

In public economics, two extremist views on the functions of a government compete: one emphasizes government working for the public interest to provide value for the citizens, while another regards government mainly as a workhorse for private interests. Moreover, as the sole legitimate authority, the government has the right to define the rules and laws as well as to enforce them. With respect to regulation, two extremes arise: from too little regulation to too much of it. If the government does not function or ceases to exist, the state falls into anarchy or chaos (Somalia). If it regulates too much, it will completely suffocate private activities, which might be considered extralegal (the former Soviet Union). In this thesis I scrutinize the government s interventionist policies and evaluate the question of how to best promote economic well-being. The first two essays assume that the government s policies promote illegal activity. The first paper evaluates the interaction between the government and the mafia, and pays attention to the law enforcement of underground production. We show that the revenue-maximizing government will always monitor the shadow economy, as monitoring contributes to the government s revenue. In general, both legal and illegal firms are hurt by the entry of the mafia. It is, however, plausible that legal firms might benefit by the entry of the mafia if it competes with the government. The second paper tackles the issue of the measurement of the size of the shadow economy. To formulate policies it is essential to know what drives illegal economic activity; is it the tax burden, excess regulation, corruption or a weak legal environment? In this paper we propose an additional explanation for tax evasion and shadow production, namely cultural factors as manifested by religion as determinants of tax morality. According to our findings, Catholic and Protestant countries do not differ in their tax morale. The third paper contributes to the literature discussing the role of the government in promoting economic and productivity growth. Our main result is that, given the complex relationship between economic growth and economic freedom, marketization has not necessarily been beneficial in terms of growth. The last paper builds on traditional growth literature and revisits the debate on convergence clubs arising from demographic transition. We provide new evidence against the idea that countries within a club would converge over time. Instead, we propose that since the demographic transition is a dynamic process, one can expect countries to enter the last regime of stable, modern growth in stages.

Essays on Russia's Economic Transition

This study comprises an introductory section and three essays analysing Russia's economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992-2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some - albeit not highly robust - evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms' engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector.

Essays on Finnish Economic Growth and Productivity, 1860-2005

This study examines Finnish economic growth. The key driver of economic growth was productivity. And the major engine of productivity growth was technology, especially the general purpose technologies (GPTs) electricity and ICT. A new GPT builds on previous knowledge, yet often in an uncertain, punctuated, fashion. Economic history, as well as the Finnish data analyzed in this study, teaches that growth is not a smooth process but is subject to episodes of sharp acceleration and deceleration which are associated with the arrival, diffusion and exhaustion of new general purpose technologies. These are technologies that affect the whole economy by transforming both household life and the ways in which firms conduct business. The findings of previous research, that Finnish economic growth exhibited late industrialisation and significant structural changes were corroborated by this study. Yet, it was not solely a story of manufacturing and structural change was more the effect of than the cause for economic growth. We offered an empirical resolution to the Artto-Pohjola paradox as we showed that a high rate of return on capital was combined with low capital productivity growth. This result is important in understanding Finnish economic growth 1975-90. The main contribution of this thesis was the growth accounting results on the impact of ICT on growth and productivity, as well as the comparison of electricity and ICT. It was shown that ICT s contribution to GDP growth was almost twice as large as electricity s contribution over comparable periods of time. Finland has thus been far more successful as an ICT producer than a producer of electricity. Unfortunately in the use of ICT the results were still more modest than for electricity. During the end of the period considered in this thesis, Finland switched from resource-based to ICT-based growth. However, given the large dependency on the ICT-producing sector, the ongoing outsourcing of ICT production to low wage countries provides a threat to productivity performance in the future. For a developed country only change is constant and history teaches us that it is likely that Finland is obliged to reorganize its economy once again in the digital era.

The role of productivity in the ecological and evolutionary dynamics of predator-prey interaction

Productivity is predicted to drive the ecological and evolutionary dynamics of predator-prey interaction through changes in resource allocation between different traits. However, resources are seldom constantly available and thus temporal variation in productivity could have considerable effect on the species' potential to evolve. To study this, three long-term microbial laboratory experiments were established where Serratia marcescens prey bacteria was exposed to predation of protist Tetrahymena thermophila in different prey resource environments. The consequences of prey resource availability for the ecological properties of the predator-prey system, such as trophic dynamics, stability, and virulence, were determined. The evolutionary changes in species traits and prey genetic diversity were measured. The prey defence evolved stronger in high productivity environment. Increased allocation to defence incurred cost in terms of reduced prey resource use ability, which probably constrained prey evolution by increasing the effect of resource competition. However, the magnitude of this trade-off diminished when measured in high resource concentrations. Predation selected for white, non-pigmented, highly defensive prey clones that produced predation resistant biofilm. The biofilm defence was also potentially accompanied with cytotoxicity for predators and could have been traded off with high motility. Evidence for the evolution of predators was also found in one experiment suggesting that co-evolutionary dynamics could affect the evolution and ecology of predator-prey interaction. Temporal variation in resource availability increased variation in predator densities leading to temporally fluctuating selection for prey defences and resource use ability. Temporal variation in resource availability was also able to constrain prey evolution when the allocation to defence incurred high cost. However, when the magnitude of prey trade-off was small and the resource turnover was periodically high, temporal variation facilitated the formation of predator resistant biofilm. The evolution of prey defence constrained the transfer of energy from basal to higher trophic levels, decreasing the strength of top-down regulation on prey community. Predation and temporal variation in productivity decreased the stability of populations and prey traits in general. However, predation-induced destabilization was less pronounced in the high productivity environment where the evolution of prey defence was stronger. In addition, evolution of prey defence weakened the environmental variation induced destabilization of predator population dynamics. Moreover, protozoan predation decreased the S. marcescens virulence in the insect host moth (Parasemia plantaginis) suggesting that species interactions outside the context of host-pathogen relationship could be important indirect drivers for the evolution of pathogenesis. This thesis demonstrates that rapid evolution can affect various ecological properties of predator-prey interaction. The effect of evolution on the ecological dynamics depended on the productivity of the environment, being most evident in the constant environments with high productivity.

Service Productivity: Toward a Conceptualisation of the Transformation of inputs

The productivity of a process is related to how effectively input resources are transformed into value for customers. For the needs of manufacturers of physical products there are widely used productivity concepts and measurements instruments. However, in service processes the underlying assumptions of these concepts and models do not hold. For example, manufacturing-based productivity models assume that an altered configuration of input resources in the production process does not lead to quality changes in outputs (the constant-quality assumption). However, in a service context changes in the production resources and productions systems do affect the perceived quality of services. Therefore, using manufacturing-oriented productivity models in service contexts are likely to give managers wrong directions for action. Research into the productivity of services is still scarce, because of the lack of viable models. The purpose of the present article is to analyse the requirements for the development of a productivity concept for service operations. Based on the analysis, a service productivity model is developed. According to this model, service productivity is a function of 1) how effectively input resources into the service (production) process are transformed to outputs in the form of services (internal or cost efficiency), 2) how well the quality of the service process and its outcome is perceived (external or revenue efficiency), and 3) how effectively the capacity of the service process is utilised (capacity efficiency). In addition, directions for developing measurement models for service productivity are discussed.

Producing interactivity : Does media convergence promote interactivity and audience participation?

This study investigates the process of producing interactivity in a converged media environment. The study asks whether more media convergence equals more interactivity. The research object is approached through semi-structured interviews of prominent decision makers within the Finnish media. The main focus of the study are the three big ones of the traditional media, radio, television and the printing press, and their ability to adapt to the changing environment. The study develops theoretical models for the analysis of interactive features and convergence. Case-studies are formed from the interview data and they are evaluated against the models. As a result the cases arc plotted and compared on a four-fold table. The cases are Radio Rock, NRJ, Biu Brother, Television Chat, Olivia and Sanoma News. It is found out that the theoretical models can accurately forecast the results of the case studies. The models are also able to distinguish different aspects of both interactivity and convergence so that a case, which at a first glance seems not to be very interactive is in the end found out to receive second highest scores on the analysis. The highest scores are received by Big Brother and Sanoma News. Through the theory and the analysis of the research data it is found out that the concepts of interactivity and convergence arc intimately intertwined and very hard in many cases to separate from each other. Hence the answer to the main question of this study is yes, convergence does promote interactivity and audience participation. The main theoretical background for the analysis of interactivity follows the work of Came Fleeter, Spiro Kiousis and Sally McMillan. Heeler's six-dimensional definition of interactivity is used as the basis for operationalizing interactivity. The actor-network theory is used as the main theoretical framework to analyze convergence. The definition and operationalization of the actor-network theory into a model of convergence follows the work of Michel Callon. Bruno Latour and especially John Law and Felix Stalder.