| Summary: | This study aims at analyzing the difference in the level of economic development
between China’s counties from the two perspectives of industrial policy and
production efficiency. Based on panel data of 1830 Chinese counties, this study
employs the new classical economic growth theory framework to analyze the
counties’ economic growth by the perpetual inventory method, Malmquist index,
among others. The results show that the economy of the counties exhibits δ
convergence since 2004, and the absolute differences in the different counties are
expanding. Industrial policy ensures the additional deepening of the level of
capital in the county. Additionally, a substantial difference was observed between
the agricultural sector and the non-agricultural sector, whereby the total factor
productivity and the technical efficiency are on the rise, resulting in the
phenomenon of dual paths of technological progress. In summary, the capital
deepening difference between the sectors, production efficiency, and dual paths of
technological progress owing to the counties’ industrial policy are the basic
reasons for the regional differences in the level of economic development in China.
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