A Study On The Effecting Factors Of Industrialization Under The Condition Of Demand Constraint

Although the whole Industry has been built in China by implementing the development stratagy of priority of heavy Industry before reform, the Industrialization, which transfer the surplus labor from countryside to urban area at big scale, has begun at the end of 1970s. In fact, the development in Industrialization has succeeded greatly since reform. Some 165 millions labours have transferred from agriculture to no-farm Industry till 2002, accounting for 34.1 percent of total labor number in rural area. In addition, the share of primary Industry output and employment decrease from 28.1 percent and 70.5 percent in 1978 to 15.4 percent and 50 percent in 2002. Under exiting large surplus labor in countryside, however, at the beginning of 1990 surplus of productive capacity and after the mid of 1990 sustained decrease of growth rate of total output value and employment in industry has been found. Obviously industrialization development over-dependent capital meet barrier of market realization. The question has been raised why Industrial consumable is not to be closeout in the market at the period of Industrialization? And the question what factor has lead to demand consumption scale needs to be answered further. Such answers will be helpful to select correct Industrialization strategy in transition, and enrich the dual economics theories.It is helpful to review the traditional Industrialization theory represented by Lewis model and theory about relation of demand and Industrialization. The former emphasizes the effect of capital on Industrialization more suitable for the beginning of Industrialization with scarcity of capital and Industrial consumable. And the latter is better explanation for the surplus of production capacity in the process of Industrialization in duel economy. After analyzing production demand structure, for this reason, the paper demonstrates the decisive role of internal consumption in Industrialization of big country and builds an academic framework of household consumption and Industrialization. From the viewpoint of Industrialization meaning, Industrialization index includes share of output value and employment which have a going up tendency with deviate dependent the partial totechnology in Industrialization, especially, the non-farm employment is not only one of the Industrialization index but also important variable of household consumption function. Therefore, by introducing non-farm employment to mode of consumer, we argue that consumer variable such as non-farm employment, residents' consumer, income distribution etc. and Industrial output influence each other in Industrialization, and technology adopted in Industrialization, income distribution plays a decisive role on Industrialization under the condition of demand constraint in this paper. This is verified as follows.Firstly, the first effort of this paper is to measure partial to technology in the process of Industrialization in China based on the theory framework of measuring Industrialization technology put forward by Ranis & Fei in 1961 and to analyze the effect of technology on demand variable such as non-farm employment and resident income distribution. It indicates that capital-intensive technology has been adopted in Industrialization after the mid of 1990s resulted from employment in industry sector caused by technology innovation negative increasing greatly and labors-intensive technology has the effect of income equalization, which can decrease income discrepancy of resident on the condition of dual structure. In addition, two countries China and India share the same experience in the Industrialization, which the Deepening of Capital comes earlier to slow transformation of surplus labor in countryside. But Industrial per-capital had negatively increased and growth rate of non-farm employment exceeded that of population size in most years of the process of Industrialization in Japan. We should learn from Japanese Industrialization which is distinctively dependent on labor-intensive technology in Industrialization.Secondly, after analyzing the change of resident income distribution since reform, the discrepancy of propensity to consumer of household with different income level and the effect of income distribution on market size of industry product are analyzed in this paper. Since reform the discrepancy of income inside and between urban-rural resident has expanded remarkably. On the other hand, we construct consumption metric model in urban and rural areas respectively according to the theory framework of income distribution, market size and industrialization put forward by Murphy and others (1989). This shows that since reform the income discrepancy of rural household has positively influenced on production market size, but that of urban household negatively. Therefore, the middle-stratum resident is the main consumer of industrial consumable and the low income of majority of peasant, continuous expansion of the discrepancy of urban resident income is the main barrier of market realization of Industrial consumable.