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The issue of regional inequality
The full spectrum of inequality lies in the comprehensive and multidimensional framework of development itself. Turner (1986) and Arcelus et al. (2006) have offered detailed discussion regarding multidimensional development. There are various aspects of inequality, such as income, education, health, human development and political participation. Human diversity has a natural impact on these aspects, and Sen (1992) points out the signif cance of advantages and disadvantages inherited by human beings; therefore, it is necessary to distinguish the types of regional inequality mainly caused by human diversity. Senâs argument is probably right. The concept and boundaries of inequality are difficult to define with accuracy. When one is dealing with the issue of regional inequality, the type of inequality under discussion should be clearly highlighted. Regional income disparity is the key issue this book seeks to explore and analyse. Fields (1989) has provided a valid definition of income inequality. Income and wealth are the funda mental benchmark indicators for measuring inequality, for two reasons. First, income growth is a good measure of economic development. Second, income has been the determining inf uence on human development: income growth establishes the key foundation for development of human well-being and related social aspects. Nevertheless, other signif cant aspects of disparity in human development will be addressed in this book, such as education, health and life expectancy.
Do regional inequality and unbalanced regional development really matter? A report published by the United Nations Development Programme (UNDP) (2000a) suggests the crucial role played by equality in ensuring the development of human well-being and national welfare. However, the world has been facing the challenge of inequality in spatial and human development. Numerous countries suffer from the problems brought about by rising regional inequality, such as social unrest, poverty and high crime rates, and for some nations these outcomes are extremely severe. McGillivray (2006) demonstrates the unequal development of public health and other social aspects between different countries and highlights the core discussion issues of regional diversity and human development inequality within the international community. Numerous previous scholars have completed studies of the serious effects of rising regional inequality faced by many nations. On the one hand, worsening regional inequality badly affects long-term economic growth and impacts negatively on economic development (e.g. Pedroni and Yao 2006). On the other hand, more significantly, rising inequality threatens social and political stability and national utility. As Fields (2001: 201) states, âHigh inequality contributes to political and macroeconomic instability.â Muller (1985) states that policymakers should consider the issue of regional equality when they implement strategies of national economic development; otherwise, severe political violence will inevitably occur. Drèze and Sen (1995) have also raised this issue, arguing that uncontrolled regional inequality would not only affect human development potential but also, more significantly, cause political instability, social conflict a violence. Their study cites the cases of the severe regional disparities within Brazil, other areas of the Americas and South Africa.
The issue of spatial inequality has increasingly attracted attention from academics. For example, Ray (1998) found that income per head in the richest nations (Switzerland) was, strikingly, nearly 400 times greater than in the poorest (Tanzania). Williamson (1991) pointed out that America had also suffered from the problem of rising regional inequality during the rapid economic development of the nineteenth century. Some Latin American studies focus on worsening regional income disparity within Brazil (e.g. Fields 2001). Brazilian national wealth has been concentrated in the south-eastern region surrounding SĂŁo Paulo, where average income per head is much higher than in other regions. This regional income disparity has faced Brazilian society with challenges such as a high crime rate, social conf ict and poverty. As far as Asia is concerned, Nepal is a classic example of severe regional inequality leading to political instability and bloody civil war. The serious Maoist insurgency, social unrest and violent conflict in Nepal were originally caused by rising social and economic disparities among the different regions and have negatively affected the countryâs national industrial and economic development (Asian Development Bank 2007). Murshed and Gates (2005) suggest that regional inequality between the capital, Kathmandu, and western districts is particularly significant
As far as China is concerned, rising regional income inequality during the reform period has been widely discussed (e.g. Chen and Fleisher 1996; Yao and Zhang 2001; Renard 2002). Severe spatial disparity has created a major challenge to the Chinese governmentâs attempts to maintain balanced economic development, social justice and political stability. For example, Chen and Fleisher (1996) argue that rising regional income inequality will not only cause social unrest and political instability but also disrupt improvements in Chinaâs long-term prospects. Research by Yao and Zhang (2001) points to unequal regional development and rising income disparities between the developed coastal, moderately developed central and least-developed western regions within China. They further stress the potentially negative impact of a failure to address such regional disparity on Chinaâs future prosperity. Nang and Huâs research (1999) is illuminating. They point out the potential negative outcome of regional economic inequality in China. Indeed, theirs is probably the strongest and most straightforward such study since 1978. In interpreting Chinese history, their study argues that spatial inequality will pose a direct threat to social stability and national political unity, as the three are closely related. Wang and Hu claim that a catastrophic political outcome is the natural consequence of severe spatial income inequality. They state:
Chinaâs own history is full of uprisings, rebellions, and revolutions sparked by economic injustice. Even if the crisis does not reach the point of revolution, social tension and instability are harmful to economic growth. Thus, there is a great danger that growing inequality will derail Chinaâs reforms and imperil its future growth.
(ibid.: 201)
In their discussion of China, Wang and Hu further add that it is unjustified an difficult to accept the fact of rising spatial income inequality in terms of the moral legitimacy of a country established on fundamental egalitarian principles. Also, Pedroni and Yao (2006) have pointed out the serious challenge for the Chinese government posed by rising regional inequality.
According to Kuznets (1953), it is not possible to achieve rapid economic growth simultaneously in all countries. Owing to the difficulties in adopting an imitating advanced production methods and new economic mechanisms facing the underdeveloped nations, regional income disparity between the economically rich and poor countries is the likely outcome. Therefore, economic development is necessarily linked to unbalanced regional growth and worsening income inequality among different nations. This is the U-curve hypothesis of regional disparity proposed by Kuznets. Nevertheless, evidence from some countries suggests that income inequality makes a difference to economic growth and human development and must be taken seriously if long-term economic growth and sustainable human development are to be achieved. As inequality can also negatively affect social harmony and political stability within a country, its causes and consequences must be addressed and resolved effectively. Rising inequality is having an epidemic effect on long-term development and social stability, an effect which, uncontrolled, will affect social welfare and fulfilment of human potential. Regiona economic disparity can not only lead to political instability and social conflict, bu also, more signif cantly, trigger the severe consequence of human health problems. Botswana is a good example of this issue. Although Botswana can show impressive economic achievements over the past few decades, internal regional income inequality has simultaneously been widening (Clover 2003), accompanied by deteriorating health conditions.1
Chinaâs leaders have now realized that regional inequality is the burning problem facing China. In China, the issue of regional development disparity is very prominent and has presented an increasing challenge during the implementation of âreform and open-doorâ policies over the past two decades. The extent of regional inequality has reached a striking level, and has been recorded as one of the highest regional disparities in Asia, second only to that found in Nepal (Asian Development Bank 2007). Although regional inequality was already high in 1978, during the reform period2 China has been facing widening economic inequality between the eastern, central and western regions. In comparison to the economically prosperous and developed eastern region, the western region has recorded much lower economic growth and remained relatively backward, with its slow economic development and low incomes leading to poor standards of human health. For example, the average life expectancy in the less developed western region is 68.4 years in contrast to 71.9 years in the developed eastern region. In certain underdeveloped and mountainous regions in the west, there are no local clinics and hospitals (UNDP 2005). In addition, the UNDP (2005: 58â9) suggests that regional health inequality can be revealed by the total number of hospital beds. For example, the average number of hospital beds per thousand people is less than 2 in poor Guizhou, in contrast to the equivalent figure of 6 in wealthy Shanghai This report highlights the much faster improvement in medical provision in the eastern area compared to central and western areas during the reform period. In 2002, the number of medical personnel per 1,000 residents was 3.8 in the eastern region; the equivalent figures were just 3.2 and 3.0 in the central and western regions respectively (ibid.: 59). These figures illustrate that regional health differences and population health inequalities are widespread in China. Some scholars argue that China has been a victim of the coexisting challenges of rapid economic growth and slow human development. Haq (1999) and Reddy (2007) cite the case of China in a striking comparison between rapid economic growth and deterioration in human conditions.
The evidence from Botswana and China demonstrates that there is a close correlation between widening regional income disparity and worsening population health. On the basis of his research on the United States, Richard Wilkinson (1999) has examined the relationship between regional income inequality and population health. He stresses that a widening regional income gap is closely linked with social conflict and worsening population health: an extremely hierarchical incom structure will lead to poor health conditions. In an earlier study, Wilkinson (1996) points out that psychosocial factors directly influence population health Meanwhile, significantly, human psychosocial stress and difficulties are main caused by low incomes and poverty. Consequently, he claims that psychosocial factors play an important role in illustrating the significant influence of wealth a income growth on peopleâs health.
In general, a reduction of regional income inequality would improve human health conditions for all groups in a society, both rich and poor. In addition, a narrowing of income disparities would reduce the scale of poverty among the poor and enable their relatively bad health conditions to be improved, both of which would contribute to increasing the nationâs average life expectancy (Wilkinson 1996). Moreover, Kennelly et al. (2003) maintain that wealth and income do make a difference to a populationâs health in that income per capita has considerable inf uence on human health outcomes. They maintain that income per capita has a big influence on shaping human health outcomes. In his research, Wilkinson (1990, 1996) has cited evidence from the developed countries to demonstrate the positive relationship between good national health (as shown in life expectancy) and an egalitarian society. Conversely, he argues, through an empirical comparison of different countries, that unequal regional income distribution leads to high national mortality rates. He quotes the examples of Japan, which since World War II has achieved low income inequality, improvements in national health (e.g. a rise in life expectancy) and rapid overall social development, and Britain, which during the period between World Wars I and II achieved health improvements as a result of social cohesion and regional income equality (Wilkinson 1996).
However, there is another argument relating to the issue of regional disparity which should not be ignored. Some scholars believe that statesâ efforts to promote regional economic equality might impact negatively on overall economic growth and that regional disparity of opportunity is an unresolvable issue. For example, Alonso (1968) argues that a governmentâs efforts to achieve regional equality in economic development can result in a slow-growing economy without in fact lessening regional disparity because such policies embody both efficiency and equity goals, which can be contradictory. According to neoclassical economic theory, regional income disparity will necessarily exist, and may provide economic opportunities during the early development stage when enhancement of private incentives and improvements in efficiency are particularly desirable. Regional income equality might, indeed, lead to slower improvement of overall human welfare, and various scholars (e.g. Stiglitz 1969; Bourguignon 1981; Mirrlees 1971) have provided detailed discussion regarding this issue. Nevertheless, the experience of many nations reveals that regional disparity is detrimental to economic growth and human welfare development. Nations exhibiting internal inequality have slower economic development than countries with less regional disparity. For example, relative to the Philippines, South Korea has recorded relatively low income disparity among the different population groups since the early 1960s. Significantly, economic development in South Korea was much faste than in the Philippines between the 1960s and 1990s (Aghion et al. 1999).
Economic growth should not be achieved at the expense of equity. Regional inequality makes a difference to economic growth, and widening spatial income disparities should be resolved. Severe regional inequality will negatively influenc social harmony and national stability, and, more significantly, overall human development. As the evidence discussed earlier demonstrates, regional income equality plays a crucial role in ensuring political stability and population health improvement. As far as China is concerned, and as will be discussed in detail in the following chapter, the issue of worsening regional economic disparity during the reform period is striking and requires urgent resolution by the state. Both the rate of economic growth and long-term development will be negatively affected by spatial income inequality. Moreover, the fundamental egalitarian principles and moral justice of this supposedly socialist country would be severely damaged if spatial disparity were not to be addressed. It is hard to maintain social cohesion and harmony when regional income inequality and disparities in human development are widening.
However, it is not my intention to suggest that the current regional inequality will inevitably cause social revolution and civil war in China â far from it. The severity of spatial inequality has not reached the point of triggering social revolution and bloodshed. Nevertheless, personally, I do think that widening regional disparity is a real threat to China and a serious challenge to the maintenance of long-term economic growth. More significantly, if regional inequalit is not dealt with, many other problems, such as poverty, and underdevelopment of health and education, will remain unresolved. If the state attempts to ignore the regional inequality problem, this could give rise to social revolution and rural rebellion in the future. This is not pure speculation or subjective prediction, as the social unrest in Xinjiang and Xizang illustrates. In addition, some scholars believe that during Chinaâs five-thousand-year history, many revolutions and rural rebellions were directly related to, or caused by, severe income disparity.
The significance of Guangdong
This study conducts a systematic analysis of the case of Guangdong Province to reflect and overview the issue of regional inequality in China during the post-1978 period. Guangdong is located in the southern region and adjacent to the coast, with total land area of 179,756.5 square kilometres and a population of 81.56 million. The Cantonese, Hakka and Chaozhou are the three main ethnic groups residing in Guangdong. Guangdong has as neighbours the two internationally prominent municipalities of Hong Kong and Macao; and its proximity to the South China Sea means that many South-East Asian countries, such as Vietnam, Malaysia and Singapore, are easily accessible. Owing to its advantageous coastal location, Guangdong also has superior marine access to the major markets in the West.
Map 1.1 Location of Guangdong Province in China.
Source: This digital map was created by the author using GIS ARCVIEW3.2 software.
Guangdongâs exposure to foreign influence can be traced back to ancient times Guangzhou became a renowned seaport in the Tang Dynasty; and the Ocean Silk Road, which originally started out from Canton (Guangzhou), became, during that time, the worldâs longest shipping route (Li and Yang 2003). Historically, Guangdong has played a front-line role in Chinaâs relations with the outside world (Vogel 1989). The history of emigration and the formation of close ties with the overseas Chinese have further fostered an âoutward-lookingâ ethos among Guangdongâs people.
Following the decision of the legendary Chinese leader Deng Xiaoping to reform Chinaâs economic system, speed up economic growth and reopen up to the outside world, China has, since 1978, experienced dramatic transformation. Perhaps nowhere is this huge change more apparent than in Guangdong. Deng allowed Guangdong to take one step ahead in adopting new economic systems and implementing market economy policies, hoping it would become a growth engine for the whole nation. Guangdong has been at the forefront of economic advancement in China since the early 1980s. Superior geographical characteristics have given Guangdong the edge in pursuit of economic prosperity and made it a key force in shaping Chinaâs âreform and openingâ policy. It is one of the industrial centres and economic powerhouses in China, taking the lead in many aspects, such as foreign direct investment (FDI), GDP ...
