New Perspective on Regional Inequality: Theory and Evidence from Guangdong, China

Abstract

China’s open-door policy and rapid urbanization have been accompanied by an unprecedented economic growth rate and an expanding regional inequality problem. Which factors affect the regional inequality? Will it get worse? What policy measures should be taken to offset these adverse effects? Based on the Lorenz curve and a core-periphery (C-P) setting, this research brings up a theoretical model for the regional inequality, using the Gini coefficient as the indicator with respect to the population concentration and the C-P gradient. In theory, given a fixed C-P gradient, the regional inequality generally shows an inverted-U curve along with the population concentration in the core area. This research maintains that a new perspective, based on the relationship between the C-P gradient and the population shift, should be taken to describe the development trend of regional inequality, because there is not a stable inverted-U shape on a time scale nor is there a constant stage of increase or decrease. The gross domestic product (GDP) per capita and the population data from the Pearl River delta, one of the biggest metropolitan areas in China, and its periphery in Guangdong province were sampled to test the theory. Further analysis indicated that a turning point in approximately 25 did not necessarily mean that Guangdong had passed the phase of expanding regional inequality. Finally, some policy proposals are suggested to mitigate the situation.