Study On Interactions Between Economic Growth And Income Distribution

Since the ancient time, human-being has been meeting economic problems, namely living and developmental problems. Rapid economic growth and fair income distribution has been the most main two aims in the long history course of human-being. In dynamic degree, the course of economic growth itself is a course that meets with various consumptive demands of human beings. Correspondly, Income distribution is also a progressive course. Just like merely economic growth does not solve all social problems, merely fair distribution also has not any meaning. There is an interactional relationship between economic growth and income distribution objectively. The interaction maybe a virtuous circles, and it also may be a vicious circle similarly. Research the interaction between economic growth and income distribution, Which means that probe into two kinds of mutual actions. At the same time, probe into how to restructure a model of improving income distribution while keep high-speed economic growth, Contemporary, probing into how to keep China's high-speed economic growth while improving income distribution.Traditional economic theory did not give an unearthly answer about the relations between economic growth and income distribution. A simple fact is that developed countries went across an industrialized path at the cost of immolate most people' benefit. After the second world war, most developing countries often attend to one thing and lose another when they make a choice between economic growth and income distribution. In china, the trinity of the traditional economic system ?namely the distorted macro policy environment, the planned resource allocation system, and the puppet-like micro management institution ?was adopted to facilitate the development of heavy industries when China was a capital-scarce economy. In order to lower the costs for the development of heavy industries, the Chinese government artificially suppressed the prices of credit, foreign exchange, energy, raw material, labor and living necessities. Such a distorted macro policy environment resulted in overall economic shortages. The micro unit was deprived of managerial autonomy in such an institution. The economic system resulted in a distorted industrial structure, poor work incentives, and low personal income allocation. Since the economic reforms and open-door policies began in the late1970s, China has become the fastest growing economy in the world. The reforms, starting from the micro management institution, inevitably put a pressure to the units and individual, and further prompt for the reforms and economic growth in the macro policy environment. The average annual growth rate of GDP in the past two decades after the reform arrive at 9.7 percent, China is likely to become once again the world's largest economy in the 21st century. With continuous economic growth, Chinese residents' personal income has been increased while living level has been enhanced in a great extent, people' living has been arrived at well-off as a whole.The main achievements of China's economic growth as follows: (1) The improvement in the micro incentive mechanism greatly increased workers' work enthusiasm and thus labor's contribution to economic growth. (2) Prompted by competition and profit motives, enterprises paid more attention to market conditions in their choice of products and technologies. The change turned around the trend of negative total factor productivity and the old pattern of growth that depended solely on increasing inputs. (3) The non-state enterprises, which utilized better the comparative advantages of relative abundant labor, expanded rapidly after the gradual liberalization of commodity process and foreign exchange rate, and the lifting of the ban on labor market. The rapid development of non-state enterprises in turn solved the problem in the socialist system that the economy's employment structure lagged far behind its industrial structure. The conclusion is that a big socialist country can also realize economic take-off and prosperity by ad...