What factors affect economic growth in China?

University essay from Södertörns högskola/Institutionen för livsvetenskaper

Abstract: The objective of this thesis is to find out what factors have been the main sources of economic growth in China in 2003 and 2010. It also aims to find out whether the Solow model can be used to explain growth in China, if factors of growth are the same in rich and poor regions, whether the factors are the same in 2003 and 2010 and if the results are in line with previous research. The theoretical framework is the Solow model. Empirical tests are performed using econometrics, and therefore this thesis has a quantitative approach. Factors used are growth in GDP per capita which is tested against investments, household savings, the level of GDP per capita, population growth, healthcare and education. The results show that the Solow model can explain economic growth in China. Investments, the level of GDP per capita and population growth are the factors most significant to growth. In poor regions, both investments and population growth are more significant than in rich regions, whereas healthcare is more significant in rich regions. Investments and population growth also have a smaller impact in 2010 than 2003. Healthcare is more significant in 2010 and than 2003, and education is only significant in 2010. Previous research shows a wide range of results, and the results of investments and population growth are consistent with those. 

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