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The regional production environment in China is decomposed into five regional factors: education endowment, foreign direct investment, agglomeration, producer's market accessibility, and consumer's market accessibility. The impacts of these regional factors on the Chinese machinery building industry and food manufacture industry are estimated across 30 regions. The estimates are highly significant and show that these regional factors substantially affect regional productivity. Across regions and over time, the capital return rate is positively related to the ratio of the total regional factor impact to the wage rate.
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Yimin Chen (1996) studied this question.
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