Study On The Regional Development Inequalities In The Background Of Industrial Transfer

China’s economy has developed rapidly and the comprehensive national strengthhas been reinforced increasingly since reform and opening up. However, the domesticeconomy doesn’t developed evenly at the same time. A great deal of industrial sectorsand factors of production have highly aggregated in the eastern coastal areas so thatthese regions have improved by leaps an bounds. In contrast, the pace of the inlandregions’ economic growth and development is so slow that the the regional economicdevelopment disparities are enlarging. The Chinese Communist Party and the stategovernment have established the guidelines of coordinated and balanced developmentand reducing regional economic disparities step by step. It has been put forward thatit necessary to “advance the factors of production flowing reasonably and industrialtransferring ordely between rigions; foster new regional economic growth pole in thecentral and western regions so as to enhance the coordination of regional economicdevelopment”. At present the whole country hope to resolve the regionaldevelopment inequalities and achieve coordinated and balanced developmnet, via therational and ordered regional industrial transfer so as to optimize the industrial spatiallayout.This dissertation attempts to study on the above issues from the perspective ofnew economic geography. It reviews the theoies of regional economic differences andtheir innovation and development in China, along with the theoies and researchprogress of industrial transfer. Then we introduce the development progress,theoretical basis and core ideas of new economic geography theory which has beengradually on the rise in recent years. On the theoretical framework of new economicgeography theory, we try to study the internal mechanism and influencing factorshiding behind the regional industrial transfer and agglomeration that cause theregional development inequalities. After that, we take China’s economic developmentas the case for empirical analysis. Based on the theoretical and empirical analysis, thisdissertation proposes some policy implications and elicitation. Grounded on the theoretical framework of new economic geography, thisdissertation introduces the coefficient of resource endowment to the core-peripheryvertical-linkage model (CPVL model for short), and loosens the limitation that laborscannot flow among different regions. It discusses the internal mechanism andinfluencing factors of regional industrial distribution pattern as a result of thegeographical spatial industrial transfer and agglomeration, in the case that differentregions own dissimilar initial resource endowments, input-output linkages in thepresence of industrial inter-sectoral, and labors are mobile among not only industrialsectors but also regions. The coefficient of resource endowment affects the breakpoint (B) where the symmetric equilibrium switches from stable to unstable,therefore it plays an important role in the stable equilibrium of the extensive model.This is because the more abundant resource endowment a region owns, the more tradecost the firms located there can save, and the total production cost is lower so that thisregion’s agglomeration forces could be reinforced. Labors can flow freely not onlyamony various sectors in the same region, but also amony different regions. Drivenby the nominal wage gap, the specific flow can be reviewed and determined throughthe comparison between the labor demanded by some region’s industrial sectors andthe labor endowment that the region initially possesses.Upon the Dixit-Stiglitz monopolistic competition and increasing returns frametheory, the economy is a very lumpy place where exists three effects: the ‘homemarket effect’, the ‘price index effect’ and the ‘market crowding effect’. The ‘homemarket effect’and the ‘price index effect’ shape into agglomeration forces thatstimulate industries to aggregate into some region, through the potential for circularcausality which is also knowns as cumulative causality, or backward and forwardlinkages. In contrast, the ‘market crowding effect’ shapes into dispersion force, and itcauses imperfectly competitive firms to move outwards in order to avoid fiercecopetition. It is the resultant force of agglomeration forces and dispersion force thatdicides the final industrial distribution pattern. Under the unequal spatial industrialdistribution pattern, the areas that own intensive industrial activities becomedeveloped regions. Firms and factors of production located in these regions can enjoythe benefit of agglomeration rents so that the self-reforcing mechanism can be strengthened. That is to say, the existing regional economic development disparitieswill restrain industries transferring from the developed areas to underdeveloped areas,and impede the narrowness of the regional disparities itself. Nevertheless, thisself-reinforcing cycle of agglomeration will be affected by regional free-ness of trade,regional market size, initial resource endowment and so on. According to thetheorectical analysis, the empirical part of this dissertation discusses and analyzesparticularly.In China the secondary industry highly aggregated in the eastern regions and thewhole country’s industrial development disparity is increasing year by year. What’smore, disparities among the eastern, central and western regions have exceeded thatinside the three regions respectively. Based upon the theoretical model and by theregression models, the empirical analysis observes some relevant conclusions: there isnotable correlation betwween the regional industrial agglomeration degree and themove of firms; the high natural free-ness of trade contributes to regional industrialagglomeration, while the effect of the institutional free-ness of trade also depends onthe local market size; market size has a positive impact on the regional industrialagglomeration degree, and at present the market size derived from the purchasingpower on intermediate inputs plays a more inportant role; the impact of abundantdegree of regional resource endowment on industrial agglomeration needs theprotection from the local government; the share of expenditure of industrial producthas a positive effect on the regional industrial agglomeration; the appropriatedevelopment of state-owned economy contributes to the industrial agglomerationwhere the market size is mall.On the condition of the existing regional development disparities, since thedeveloped areas owns agglomeration rents, the existence of locational hysteresis andthe threshold effects of policy, it is necessary to enhance the control potency ofregional economic policies and make it overleap the threshold so as to change theoriginal development path. The formulation of policies needs to consider from theperspective of regional free-ness of trade, regional market size, input-output linkagesand so on. For example, it is necessary to enhance the infrastructure including thetraffic transportation, communication and logistics system inside the underdeveloped regions; making the local protection play a appropriate role, and formulatingdifferential regional economic policies; establishing complete coordinated industrialsystem and devoloping industrial park economy; reforming the income distributionsystem economy in order to narrow the income gap; developing the state-ownedeconomy in an appropriate degree in the underdeveloped regions and so on.