Regional Economic Convergence Mechanisms in the Yangtze River Delta

This paper decomposes the economic growth of the Yangtze River Delta into physical capital accumulation, improved efficiency, technological progress, and human capital input based on the non-parametric DEA method. It then examines the convergence effects of these four factors and the growth rate of the Delta using spatial statistic and econometric techniques and employing the absolute convergence equation. Our empirical findings show that the economic contribution of physical capital drives the real economic growth of the Delta's counties, cities and districts. Regional economic growth exhibits a significant spatial dependence which has had a marked effect on trends in economic growth. The neoclassical economic growth factor, physical capital accumulation, is the only factor involved in narrowing the gap among different parts of the Delta region and has driven the trend of economic convergence. Other new economic growth factors such as human capital, improved efficiency and technological progress have resulted in divergence in the Delta's economic growth and have had a profound impact on the economic disparities among different parts of the Delta region.