Empirical Research on Chinese Industrial Diversity and Economic Performance*

It has often been suggested that economic diversity enhances economic performance, either by promoting higher lever of economic growth or by improving stability of regions. This is the conventional wisdom, but it has not been adequately tested. This paper undertake an investigation of industry diversity to analyze whether support can be found for these assumptions by testing them with data of industrial added value and GDP of China from 1978-2006. The results suggest that in the research period, within-set diversity has a positive impact on economic performance in the pattern of GDP per capita, but between-set does reverse impact, both in a non-linear way. Total entropy indices shows no significant impact on economic performance may because the positive influence taken by within-set diversity is neutralized by impact from changes of between-set diversity.