On Urbanization And Economic Growth

Urbanization is the accompanying phenomenon of industrialization and modernization and the level of urbanization is the sign of the prosperity of the country concerned. According to the judgements made by Chennery and Kuznetz on industrialization, China is in the middle phase of industrialization. However, the urbanization process is evidently lagging behind. In 1998,theurbanization rate of the population is 30.39%, not only much lower than the average 80% of the industrialized countries, but also lower than the world average of 47%, and even lower than the average 35% of the developing countries. China's huge population size is to a large extent responsible for this, can't be excused for it's misunderstanding and mis-judgement of the theory and formulation of urban policies in China.Three decades before the opening and reform of 1979 saw china's formation of a complete set of industries and national defense systems and the industrialization. However by 1978, 82% of the rural population and 72% of labor in rural areas engage in agricultural work. This clearly shows that the industrialization in this period is a "narrow state industrialization" with the following consequence: national economy was being industrialized, but the rural residents didn't benefit much from this process and their income level was low as than they were caught in the "trap of low income level in industrialized ". Since the opening and reform, great effort have been made to solve this problem in increasing the income of the rural people, especially in creating jobs in the non-rural sectors. But up to now there is 70% of the Chinese labor force working in lowing-paying rural and agricultural sectors. This shows that we are still in that trap. As a result, China's industrialization is unbalanced.The main effects of urbanization are "accumulative effect" and "beneficial result of scale". Therefore, the next stage China will go into industrialization with the motivation of urbanization. That is also the course that will see much more peasants switching to non-agriculture industry which will offer them much greater incomes. On the other hand, the course of increasing incomes goes hand in hand with increasing effective demand and enlarging market; It is also the course in witch nine hundred millions rural residents are to blend into modern economic growth and modern market (That may take 50-80 years). In conclusion, according to the analysis from all aspects, urbanization is not only a project that we should push forward from now on but also a central link in the national economic growth that will achieve the growth of employment rate, improvement of competitiveness of industry, enlargement of domestic demand, enhancement of the level of education and better public health and economy into a virtuous circle.The thesis is composed of seven chapters and about one hundred thousandswords.Chapter one is the overview of the thesis. On the basis of clearly-defined concepts of urbanization and economic growth, I try to establish the connection of urbanization and economic growth from theory and positivism. From chapter two to chapter six, I still try to find out how the mechanism of urbanization influences five main factors that affect economic growth.Chapter two tries to explore how the capital formation influences Chinese economic growth in the course of urbanization. I think that the urbanization influences not only the formation of physical capital but also to the formation of human capital .The effects of increasing incomes and investment are obvious during the course of urbanization; for the formation of human capital, the thesis analysizes the influence of urbanization on human capital from two aspects: supply and demand.Chapter three tries to find out how the structure changes influences the Chinese economic growth. At first, from the point of view of the economic history, the thesis examined the theoretical development in economic growth from negligence of the influence of the factor of structure to emphasis on the influen...