Economic Open Up, Market Segmentation And Unbalaced Regional Econmic Growth In China

Unbalanced regional economic development has become a huge obstacle to China's long-term sustainable development. More analysis of the impact of regional economic development imbalances, but the economic openness and market segmentation at the same time has not yet included in the analysis system. So that different areas have different opportunities because of different economic openness. The areas which opened earlier and the degree of openness higher developed faster; while those which opened later and the degree of openness lower developed slowly. On the other hand, we should see if a high degree of integration of the domestic market, openness is not the conditions of imbalance in economic development. With the free movement of elements and goods within different areas, the economy's growth would be convergence.. However, when it exists market segmentation, regional economic imbalances caused by different economic openness will continue. The lead elements of market segmentation and the free flow of goods to the law of one price can not be achieved, inter-regional economic ties hinder the growth trend of regional economic, and the equilibrium growth can not be realized.How does economic open up and market segmentation affect uneven regional economic development? What is the impact mechanism? Whether the linear relationship exists like the existing literatures? This is the focus of this paper. This paper argues that economic open up and market segmentation posed nonlinear effects on the uneven growth of the regional economy. Specifically, the point of view of market segmentation, market segmentation has the local protectionism color, so in the early stages of economic development, its protective effect on the economy can effectively prevent the erosion of the foreign market, and what is more the local governments often take the super-protection actions of property rights protection mechanisms to develop local economy; However, local protectionism is not conducive to the play of scale and technology diffusion effect, and therefore it tends to bring distortions in the economic development, and not conducive to regional long-term economic development, so there exists a nonlinear process. As for economic open up, the nonlinear process is more complicated. In the early stage, economic open up itself can promote economic growth, as it belongs to economic growth itself. But with the development of open up, it may also pose danger to economic growth. If the early economic growth without bring technological innovation and industrial upgrading, economic open up will not be able to continue to promote economic development. Therefore, on the basis of theoretical analysis, market segmentation and economic open up both have the nonlinear relationship with the uneven economic growth.This paper aims to analyze the imbalance of regional economic development in China from the perspective of economic openness and market segmentation. The full text consists of seven parts.Chapter1is the introduction of this paper, and it proposes the problems to be analyzed and researched. It also claims the main innovations of the whole work.Chapter2is the review of the literature of the economic liberalization, market segmentation, uneven economic development and regional economic convergence literature of the sort. Firstly reviewed the literature of how the economic opening up affect the regional economy, and we found that when analyzing the impact of economic openness on economic growth, current literature focused its eyes mainly on the linear analysis of unbalanced economic development, but not concerned about its nonlinear effects. Secondly we reviewed the impact of market segmentation on the uneven economic development. We found that the existing literatures have not systematically analyzed the market segmentation on the uneven economic development, especially lacking the empirical research. At last, we reviewed the literatures of economic convergence and found that the current study did not include the economic convergence of economic openness and market segmentation, and what is more the method used flawed.Chapter3is the theoretical analysis. Analyze the impact of market segmentation on the unbalanced regional economic development theoretically. Mainly from four aspects, First, the view of dynamic comparative advantage, market segmentation is likely to give the regions lags behind economic development by choosing not participating in the regional division of labor to get a better division of labor in the future status. Second, institutional economics point of view. Market segmentation can provide a the unique property rights protection and special form of incentives so to promote regional economic development but it may also limit the continued development of the regional economy; The third is the perspective of economy of scale, market segmentation is apt to minimize the market size and will do harm to sustainable development; the last is the perspective of technology diffusion, market segmentation hinders the proliferation of technology, and economic openness is conducive to the proliferation of technology, so market segmentation restricts technology diffusion and limit the potential of regional economic development. Finally, a mathematical model of economic openness and market segmentation techniques is proposed. And we come to the conclusion that market segmentation and economic openness consist of a nonlinear relationship between the regional imbalance in economic development, and their mechanism of action is different at different stages.Chaper4constructed the indicators of measuring the degree of market segmentation. Existing market segmentation metrics use the relative price, but this method can only reflect the segmentation between two provinces but can not reflect the degree of segmentation of one province with other provinces, and meanwhile the indicators have not been able to excluding the distance factor in market segmentation. We constructed a new method based on the relative price method. Based on the indicators preliminary constructed we analyze the trends and laws of the degree of market segmentation in China, and come to a conclusion that fiscal decentralization can not be the causes of market segmentation.Chapter5added economic openness and market segmentation into the economic convergence model, and used the bias corrected dummy variable least squares model as the empirical method. This chapter analyzes the situation throughout the country and eastern, central, western regions respectively. We found that economic openness and market segmentation affect regional economic convergence significantly. In addition, economic openness and market segmentation have a non-linear impact on regional economic development. In national level, economic openness promote economic development. And if the degree of market segmentation is low, market segmentation promote economic development; while the degree of market segmentation is high, market segmentation will hinder the region's economic development; in the eastern region, economic openness promoted eastern region economic development, but due to the substitutes relationship between domestic market and international market, the eastern part of market segmentation on economic growth plays a positive role; in the central region, the relationship between market segmentation and economic growth is not significant, but the opening up promote the economic development significantly; in the western region, economic openness's impact on economic growth was not significant, but the low degree of market segmentation can promote the economic growth and the high degree of market segmentation will lag the western economic growth.Chapter6used the panel threshold cointegration regression model to analyze the impact of the economic gap between regions in different levels of opening up. We found that the economic gap between provinces of the whole country and the provinces of eastern part exist a single threshold effect. In low degree of economic openness, market segmentation can minimize regional disparities; while in the high degree of economic openness, market segmentation is to expand the regional economic disparities. The central region exist a double threshold effect. when the degree of economic openness is improving, the mechanism of market segmentation influencing the economic disparities is from narrowing to expanding. With the improvement in the level of economic openness, the developing regions narrow the economic gap by increasing the degree of market segmentation will be increasingly difficult to work.