Hochul Shin, Seoul National University: This paper analyzes the determinants of GRP per capita in China. The authors decompose the contribution of each variable for regional inequality. The paper's strength lies in its use of unique data of financial development in China. It estimates the impacts of financial development, urbanization, and globalization on regional income inequality in China. The paper provides various policy implications.
I have several comments. First, can urbanization be an independent variable for economic development? Urbanization can be the result of economic development. In Tables 5 and 6, urbanization contributed about half of regional inequality. If so, then what can explain the regional difference of urbanization? I suggest that the authors conduct a regression without urbanization.
My next comment focuses on the coefficient of international trade. The paper shows this is significant and negative in Tables 3 and 4. It might indicate the correlation between unobserved random...