Research On City Scale, Efficiency And Economic Growth In China

Since the 21st century, cities in China have developed rapidly. As a result, the urban system is improving and urban layout is becoming more reasonable. The trend of population agglomeration is becoming more and more remarkable and city scale is constantly expanding. Basically, expansion of urban scale stimulates two economic effects:one is local economy, and the other is urbanization economy. Local economy is the scale economy in an industry which mainly drives from improvement of production efficiency with professional allocation, reduction of labor cost, knowledge sharing and spillover in an industry. Urbanization economy is the scale economy between different industries, reflected as the economy of public goods supply, the cooperation between industries and knowledge spillover etc. With the expansion of city scale, economic effects of city scale work well. Good city infrastructure, communication convenience, perfect transportation system and skilled management team improve efficiency of the whole city and promote the economic growth of cities. However, some outstanding problems appear during the progression of urbanization in China. These problems include development mode of low quality, development without clear objects and over-urbanization in some cities which lead to the waste of energy resources, occupation of cultivated land, water shortage and serious environmental pollution. Consequently, urban natural carrying capacity decreases significantly. Furthermore, the expansion of urban population brings out many social problems such as housing problems, traffic congestion, unemployment and so on. The phenomenon of congestion, increase of commuting costs, rise in the costs of production and living, deterioration of ecological environment are obvious in some cities, which bring negative impacts on efficiency of the cities and hinder urban economic growth. City scale, efficiency and economic growth are independent and interactive. The relationships between city scale, efficiency and economic growth have attracted attentions of policy making departments and domestic scholars. Based on New Economy Geography Model and thoughts, this paper selects cities at prefecture level and above as analyzing samples and analyzes the influencing factors of city scale. Then, the paper studies city efficiency and the relationship with the city scale. On the basis of econometric model and empirical results, this paper discusses the relationship between city scale and urban economic growth, and evaluates the optimal urban scale constrained by economic growth in our country. Lastly, this paper gives policy suggestions on the future development of China’s urbanization from three aspects of city scale formation, improvement of city efficiency and promotion of urban economic growth. The main conclusions are as follows:First, Two Cities’Model explains population migration phenomenon from small cities to big cities. One City Model explains population migration phenomenon from rural area to urban area. Both models show that home market effect and living cost effect are the important mechanisms of population agglomeration. Meanwhile, congestion effect is the force of population diffusion.Second, the analysis on the influencing factors of city scale shows that the factor of location has certain impacts on city scale. Comparing with medium and small cities, more significant impacts are in the large cities. However, the impact is becoming not significant in recent years. Resource endowment has noticeable impact on medium cities, but no significant on small and large cities. Urban development level has significant impact on city scale, of which market size becomes less significant with the growth of city scale, the second industry plays a more important role in the growth of smaller city scale, the third industry is more important for big cities. As the foundation of urban scale growth, public facility has significant and stable impact on city scale, which is obvious in Middle and East regions with higher economic level. The greater city size is, the more significant impact urban income level has. Compared with Eastern region, high incomes in the Central and Western regions are more attractive for people to move in and settle down. Human capital investment could effectively promote the growth of city scale, and the greater city size is, the more significant effect human capital investment has. Primary human capital and intermediate human capital with less liquidity are the foundation of knowledge spillover, which play an important and stable role in the growth and development of cities.Third, the analysis on city efficiency and the relationship with city scale shows that overall city efficiency in China is at the medium level. City efficiency of most cities is not high and not reaches the expected level. The main reason of low city efficiency is the lacking of urban technology efficiency. In contrast, the urban scale efficiency has reached comparative ideal level. City efficiency should be improved a lot in the future. There are strong spillover effects and spatial dependencies between different cities in China. As a result, city efficiency has significant spatial correlation. City scale has a significant positive influence on the improvement of city efficiency through agglomeration economy effect. Moreover, human capital, market freedom and economic openness has important impacts on city efficiency. The influence of spatial spillover effects on city efficiency is not significant.Fourth, the analysis on the relationship between city scale and economic growth shows that economic growth is significantly influenced by city scale though agglomeration effect and they present a characteristic of inverted "U"-shape curve. There is an optimal city scale which brings out the maximum economic volume. The are threshold effects of city scale on economic growth. The effect of city scale on economic growth can be divided into four stages according to the threshold value and optimal city scale.Compared with the existing literature, the innovations of this paper are mainly manifested in the following aspects:First, Considering the typical dual economic structure of China, this paper builds Two Cities’Model and One City Model based on the basis of related New Economic Geography Models and many researchers’ related achievements, which theoretically explains the formation and development of city scale. Furthermore, this paper makes an empirical analysis on the influencing factors of urban growth by using quantile regression for panel data.Second, based on the evaluation of city efficiency this paper analyzes the characteristics of spatial distribution and evolution of city efficiency, gives an empirical analysis on spatial spillover effects and influencing factors of city efficiency by using spatial econometric method, applies O-B decomposition method to determine the different degree of the factors influencing city efficiency, studies the relationship between city scale and city efficiency.Third, this paper analyzes the influencing factors of urban economic growth by the dynamic GMM, studies the threshold effect of city scale on economic growth and optimal city scale, divides the effect of city scale on economic growth into four stages.