区域经济学regional economic development第七章.ppt

1、LESSON 7,We have previously looked at some issues relating to regional disparities in China. Previous discussion will not be repeated but some major propositions will be reviewed before we proceed further.,The first point to note is that as development has occurred in China over the last thirty year

2、s, growth has been quite uneven when looked at in regional terms. The greatest growth has been in the coastal provinces, not in the interior. Growth in the coastal provinces, in fact, has been the driving force for the national growth experienced since 1980.,Thus, a significant gap has opened up bet

3、ween the richest region and the rest of the country. This gap can be seen in the level of GDP/capita in different regions as well as the rate of growth, employment levels, migration patterns, infrastructure development, etc. These gaps are significant and they are important.,In 2007, per capita GDP

4、in various provinces was Qinghai14257 yuan Zhejiang37411 yuan Jiangsu33928 yuan Fujian25908 yuan Guandong33151 yuan,Part of what makes these regional disparities important is that they indicate the unevenness of the growth and development that has taken place and the fact that a failure to address t

5、hem could create or contribute to a rising level of citizen dissatisfaction with the gains from growth or at least the way those gains are distributed.,The hukou system, which is the household registration system, is a potentially important point to consider in looking at regional disparities. When

6、we looked at the so-called neo-classical model of regional adjustment, we saw that in a perfectly functioning market system, with perfect labour mobility, regional disparities will be eliminated by workers moving from low wage regions to high wage regions.,This adjustment mechanism does not solve th

7、e problem because markets are not perfect and also because not all labour responds just to economic incentives. But in the China case, the hukou system adds another layer of difficulty to the analysis because it means that workers are not completely free to move.,In practice, workers now are more fr

8、ee to move than was previously the case. But unregistered workers still have problems in terms of access to schools for children and being able to work for government, etc. This means that the market adjustment mechanism cannot work even if it was otherwise capable of solving the problem.,The Chen a

9、nd Groenewold paper that has been assigned considers this question of the impact of reducing the cost of migration. Basically the hukou system makes migration more expensive. Relaxing the rules about household registration will make it easier for workers to migrate and to take their families with th

10、em.,Chen and Groenewold find that Reducing the costs of migration will reduce regional disparities BUT This will be at the expense of the already leading region, which for China is the coastal region.,Remember that the way the migration solution works is that as workers move from the low wage region

11、 to the higher wage region, the supply of labour in the low wage region falls and the supply of labour in the high wage region rises. These supply changes will cause wages in the low wage region to increase and in the high wage region to decrease.,So the high wage region will experience a fall in in

12、come. The low wage region gains but part of that gain is at the expense of the high wage region.,This means that the region that starts out ahead has a lot to lose from reducing regional disparities in this way. This means that the better off regions will argue against changing the hukou rules becau

13、se it is in their interests for things to stay as they are.,There is also another consideration. The present system gives the better-off regions access to a cheaper source of labour to supplement their local labour force. Part of this comes from the fact that migration under the present hukou system

14、 is typically not permanent for many workers, i.e., they are itinerant workers. Changing the hukou rules to make migration easier will change this.,Itinerant workers are typically willing to work for lower wages than resident workers. So relaxing the hukou rules to allow for more permanent migration

15、 will increase production costs for firms in the more advanced regions.,Chen and Groenewold develop a simulation model to examine the effects of various government policies on regional income differences. The details of the model will not be reviewed here. Basically it is a two region model that ass

16、umes a coastal region and an interior region. The coastal region is characterized as predominately manufacturing based and the interior region as primarily agriculture based. Agriculture here is used to denote all primary industries, such as farming, fishing, mining, forestry, etc.,Looking at their

17、results, they find the following: An increase in interior government- provided consumption does not reduce the income gap in either the short run or the long run. The gap actually worsens as income per capita rises slightly in the coastal region and falls in the interior region. This is primarily be

18、cause they assume that the government budget must be balanced, so the increase in consumption spending is at the expense of infrastructure spending and the negative consequences of the latter outweigh the stimulus effects of the former.,2. An increase in interior government infrastructure spending r

19、educes the gap by increasing per capita income in the interior region and reducing it in the coastal region. Again, the budget is assumed to be balanced but now consumption spending is reduced to cover the new infrastructure spending and as before, the latter has a greater income effect than the for

20、mer.,3. A cut in agricultural taxes helps agriculture in the interior region but the overall impact at the end is that although the output gap gets reduced somewhat, the output per capita gap increases. This is because the extra agricultural output causes a fall in the price of agricultural goods, t

21、o put it in relatively simple terms.,4. An improvement in agricultural productivity reduces the output gap and the output per capita gap. Capital will flow from the coastal region to the interior and migration will be from the coastal region to the interior. Overall welfare increases in both regions

22、,5. A relaxation of the hukou regulations, as already mentioned, results in a substantial increase in migration to the coastal region and this significantly reduces the output per capita gap. But it does this by actually lowering output per capita in the coastal region, while raising it in the inter

23、ior. Hence, it involves a redistribution of income between the two regions that means the coastal region has a vested interest in preventing any change in the hukou regulations.,6. An increase in the central governments spending in the interior region does not change the per capita output gap. Becau

24、se of the balanced budget assumptions they build into their model, more spending in the interior means less spending in the coastal region. The output gap does not improve because ultimately migration flows outweigh output effects and the per capita output gap increases,7. A fiscal transfer from the

25、 coast to the interior does not reduce the per capita output gap.,The results of this paper are somewhat artificial as any simulation exercise will be. Some of the assumptions, especially the balanced budget assumption, also clearly affect the results. So looking at which policies work and which don

26、t must be evaluated with these considerations in mind.,Nonetheless, a significant finding is that polices aimed at improving agricultural productivity are amongst the most effective in reducing regional income disparities in terms of output per capita. A second significant result is that redistribut

27、ion policies do not work very well.,And a third significant result is that allowing more migration from the interior to the coast, i.e., from the poorer region to the richer region, can be significant in reducing disparities. On the one hand, this conclusion tells us that what we already know is confirmed. No one doubts that migration will help solve the problem.,But this being said, two points must be made: The evidence from other countries suggests