What has caused regional (relative) poverty in China? A multi-dimensional and multi-factor analysis of 295 Chinese cities

Abstract

Despite ongoing economic development around the world, poverty is becoming an increasingly important problem. Although absolute poverty still appears in some countries, relative poverty (the gap between the rich and the poor) has become the focus of attention. To learn what factors affect regional economic development, and therefore affect relative poverty, we selected 295 Chinese cities and analyzed their economic development problems using spatial econometric models (ordinary least-squares, spatial lag, and spatial error models), and city classification criteria (region and size). We found that optimization of the trade structure, improvement of medical resources, and development of fiscal decentralization and a market economy promoted regional economic development, but that the gap in disposable income between urban and rural areas combined with environmental pollution to limit regional economic development. Therefore, regional governments must continuously optimize their region’s economic structure, use tax revenues rationally to solve their region’s most serious problems, continuously promote trade, and narrow the gap in disposable income between urban and rural areas to solve the problem of relative poverty. Our results provide suggestions for China’s regional economic development, but also provide a reference for other developing countries to mitigate poverty and achieve more sustainable regional economic development.