Research On Economic Policies During China's Pro-Poor Growth

After World WarⅡ, global economy has achieved significant growth. At the same time, poverty and inequality around the world is still the greatest challenge that the whole world has to face with. On one hand, there are obvious discordances between the high growth of the world economy and the grim situation of poverty, which also runs in the opposite direction to the ultimate objective of human development. On the other hand, developing countries represented by China that have gained remarkable achievements both in economic growth and in poverty reduction, have huge income gap that goes far beyond governments'imagine of the original reform policies and the World Bank expectation earlier. If the situation of inequality continues to worsen, it is bound to impede socio-economic sustainable development. Therefore, since 1990s, foreign academia and international institutions that concerned about the issue of developing countries shift their focus from simple "economic growth" on to "growth that benefits the poor (pro-poor growth)". They propose that governments of developing countries should not only ensure sustained and stable growth of economy, but also pay attention to whether the poor can participate in the process of economic growth and get a reasonable share of economic growth. This means that developing countries need to re-examine the past development strategies and growth patterns, and it is of great significance to make scientific "pro-poor growth" policies so as to achieve economic and social development.How to use pro-poor growth strategies to promote equitable growth is a cutting-edge and hot topic in development economics at present, as well as an important strategy by which international organizations and governments achieve equitable. In recent years, pro-poor growth has gained high enthusiasm internationally, and the theoretical research and policy practice of pro-poor growth have made important progress. But these problems has not attracted sufficient domestic attention; Research on pro-poor growth is not deep enough, and problems that exist in pro-poor growth strategies have not got enough attention, which to a large extent hindered China's policy practice of pro-poor growth. This article seeks to a "comprehensive, unified, coordinated" effect through the research on pro-poor growth and "macro-micro" policy analysis framework. That is to sort out, classify, expound the basic theories such as concept scope and measurement of pro-poor growth, and also supplement of the gaps of policy framework study. I hope that these efforts will gradually push the research on China's pro-poor growth forward.Main contributions of this paper include the following three aspects:1. Calculating and determining the degree of pro-poor economic growth in China. It is of great importance to scientificly define and accurately measure the pro-poor degree of China's economic growth and reasons of change, and use the results as the basis of policy adjustment and indicator of performance of governance at all levels. With PEGR method in accordance with the monotonicity axiom, using the grouped data of the income of China's rural residents, this paper calculates the pro-poor degree of China's economic growth, and determines the nature of China's economic growth. This study provides an important reference for analysis of the trend of changes in economic policies and design policy framework for pro-poor growth.2. Constituting a basic framework for policy analysis of pro-poor growth in accordance with the reality of China's economic development. Based on latest research on the theory of pro-poor growth both at home and abroad, this paper studies the model of systemic analysis innovatively from a combination of "macro-micro" perspective. Indicators of personal welfare that pro-poor growth emphasizes, are personal characteristics in essence, and must be operated at the micro level. However, it is difficult for this kind of micro-level indicators to link with the macroeconomic policies and structural reforms timely and directly. Embedding CGE model between the macro-consistency model and micro-welfare indicators, this paper, achieves connections of macro and micro, and makes a number of useful attempts to solve this problem. On the basis of research on policy trend and model imitative analysis, we can grasp the information of long-term and short-term effects of economic policies and impact, according to we can establish and modify a more scientific "pro-poor growth" policy framework.3. Providing a useful reference for other developing countries to achieve pro-poor growth. In the May of 1988, among the 183 countries tracked by International Monetary Fund,132 are considered developing countries, many of which have problems of the damage of low-income groups'relative interest in the process of rapid economic growth. Of course, due to differences between countries, this paper can not get universal conclusions, but our pro-poor policy analysis framework provides a reference to study similar problems in other countries. In accordance with the logic of "exploring theoretical basis, improving overall' framework, analyzing implementation difficulty", this paper is divided into three parts:pro-poor growth theory, policy analysis framework, application and extention. It includes 7 chapters:Introduction as Chapter 1, Chapter 2 and 3 correspond to the theories of pro-poor growth, Chapter 4 and 5 correspond to the framework of policy analysis, and Chapter 6 and 7 correspond to the part of application and extension.Chapter 1 is the Introduction. This section introduces the importance of the research on pro-poor growth, summarizes the current situation of pro-poor growth at home and abroad, describes the main innovation and research methods.Chapter 2 makes a systemic investigation. First of all, this part gives summary and classification of the interaction of the interaction of poor-growth-inequality triangle (PGI Triangle), and makes analysis and evaluation of the relevance of the PGI on the basis of classical economics, neo-classical economics, as well as Kuznets "inverted U-hypothesis". Then, the focus turns to investigation on the remarkable progress in the theory of economy growth and methodology on poverty analysis, especially after social welfare standards about integration goal of PGI was proposed in 1970s. The development of this theory helps economists to gain a more detailed and wider observation of economic growth, poverty and distribution, and also lays a theoretical basis for study of pro-poor growth.Chapter 3 examines the conception scope and calculation problems of the pro-poor growth. This chapter firstly explains the theoretical issues such as the conception scope and calculation problem of pro-poor growth, and defines the connection of China's pro-poor growth combined with China's economic growth and the specific circumstances of low-income groups'increasing welfare. Secondly, it sorts out the measurement framework of pro-poor growth, and reviews strength and weaknesses of each method; on which it chooses PEGR index as a better choice, calculats the pro-poor degree of China's economic growth with China's rural grouped data during 1987—2006, thus gives the judgments of the nature of China's economic growth..Chapter 4 discusses the general framework of "macro-micro" policy analysis on pro-poor growth. Traditional macroeconomic models (macroeconomic econometric model and computable general equilibrium model) use typical individual analysis model or total analysis model which can not be used to analyze the income distribution effect of micro-economic policies on micro individual and the cumulative financial effect on the change of micro individual condition and behavior. Inspecting the performance of government's economic policy in pro-poor growth from the perspective of macro-micro combination can find out an academic explaination of gains and losses of welfare allocation in the process of economic growth, and also can find out a better theoretical basis for macro-micro combination economic policy of promoting pro-poor growth. This chapter attempts to build a model framework that can identify the important relationship between the results of welfare allocation in pro-poor growth and economic policy——macro model and family data micro model——to inspect the impact of welfare changes brought by public policies such as trade system, tariff and non-tariff barrier, exchange rate, interest rate, fiscal and monetary policy, composition of public expenditure, labor market regulation. In order to explain the problem comprehensively, the author brought out two sets of policy analysis framework, that is 1-2-3 CGE model (framework I) and Zheng Yuxin model (frameworkⅡ) chosen in the second level of CGE model. It is difficult to obtain survey data of China's national or provincial representative household, so Framework (Ⅱ) is only of theoretical. However, according to the calculation of framework (I), we can get the predictive value of welfare target and result of poverty consistent with a series of macroeconomic policies so that we can make quantitative analysis on the effect of economic policies on pro-poor growth.Chapter 5 focuses on the effects of changes of economic policy on China's pro-poor growth. In the transition process, as means of stabilizing fluctuations in the economic cycle and economic development, macroeconomic policies of government will give rise to a significant distribution effect no matter how it affects the macroeconomic. Based on the general framework of "macro-micro" policy analysis on pro-poor growth, and through the empirical analysis of China's pro-poor growth macroeconomic policies, this chapter discusses the combined effects brought by the changes in government expenditure, trade liberalization, financial sector liberalization, the impact of macro-policy etc., and the effects on different social groups, especially low-income group.Chapter 6 promotes the adjustment ideas of macroeconomic policies under the objective of pro-poor growth. China has now entered a new important development stage and has to face with lots of uncertainties. Meanwhile, different choices of development strategy will lead to different results. Using theoretical framework and empirical model the paper designed and scenario analysis, this chapter makes simulation analysis on prospects of China's economic development 2010—2020. Firstly, setting the benchmark growth scenario based on China's medium and long-term macroeconomic policy framework. That is to say, analyzing the trend and reason possible scenarios in future based on China's past and current economic characteristics. Secondly, designing and simulationing of another two scenarios based on benchmark growth scenarios. One is pro-poor growth scenario, concerning to achieve the dual goals of developing economic and improving lives of the people with the requirements of scientific development concept; the other is crisis and risk scenario, which is to set a more prudent economic development scenario according to the crisis and risk at present or potentially. Finally, the chapter gives the adjustment ideas of macroeconomic policies under the objective of pro-poor growth.Chapter 7 brings out the adjustment ideas of government expenditure policy under pro-poor growth. In China's process of accelerating pro-poor growth, government should promote opportunity equality through a series of institutional arrangements, in the meanwhile of creating an enabling macroeconomic environment for economic development. Government expenditure should be regarded as the most important redistribution institutional arrangement. However, income growth rate of low-income group is smaller than that of the growth of government expenditure in China. Taking the financial sustainability into account, the size of government expenditure cannot expand unlimitedly. In this situation, it is important to adjust and reconstruct China's government expenditure in order to fit pro-poor growth strategy. Based on this, the paper considers the idea of perfecting the structure of government expenditure. Firstly, classifying government expenditure into government investment and government welfare so as to observe its respective effects on the welfare of low-income group, thus to answer which one is preferred; Secondly, sbdivisioning public welfare furtherer, thus to answer how to set up the government's public welfare system to promote pro-poor growth.