Wan_regional poverty_2007

Wan_regional poverty_2007 - Review of Income and Wealth...

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UNDERSTANDING REGIONAL POVERTY AND INEQUALITY TRENDS IN CHINA: METHODOLOGICAL ISSUES AND EMPIRICAL FINDINGS by G uanghua W an * United Nations University–World Institute for Development Economics Research, Finland This paper focuses on methodological and empirical issues in analyzing regional poverty and inequality trends in China. It provides a time profile of China’s regional inequality, outlines the latest development in inequality decomposition techniques, introduces six papers in this special issue of the Review , and finally offers suggestions for future research. 1. I ntroduction As remarkable as its growth miracle is China’s fast rising inequality and emerging urban poverty. The latter reflects the uneven nature of economic growth which has favored some sectors, regions and individuals more than others. While much has been written on the growth aspect, less is known about the causes, consequences and policy measures regarding inequality and poverty in China. This is surprising and regrettable as an accurate assessment of poverty and inequality trends and patterns in the most populous country on earth is central to under- standing changes in worldwide inequality and poverty—these differ significantly when China is included or excluded (Milanovic, 2002, 2005). In the same context, China’s future performance is crucial to the achievement of the Millennium Devel- opment Goals at the global level. Within China, inequality and poverty are amongst the most important social and economic issues. The ongoing campaign of “western development” launched in 1999 and the recent government initiative of “building a harmonious society” highlight the urgency and significance of analyz- ing these issues. In particular, policy-makers are increasingly concerned about the regional divide and the rural–urban gap, which could undermine social and politi- cal stability, and adversely affect long run economic growth in China (Wan et al. , 2006). Earlier research on inequality in China was mostly focused on measurement of regional inequality (Tsui, 1991). This is followed by inequality decompositions, aiming at gauging the broad compositions of regional inequality (Rozelle, 1994; Note : I would like to thank Stephan Klasen and Bart van Ark, editors of this journal, for their consistent support to the special issue. I am also grateful to anonymous referees for their detailed and timely reports. Many of them undertook second- or even third-round reviews, which were invaluable in shaping up the papers included in this special issue. Finally, I owe a great deal to Janis Vehmaan-Kreula of UNU-WIDER, Project Assistant, who provided tremendous help in running the project. *Correspondence to: Guanghua Wan, UNU-WIDER, Katajanokanlaituri 6 B, Fin-00160, Helsinki, Finland ([email protected]).
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