Study On The Relationship Between Infrastructure, Regional Economic Growth And Regional Economic Gap

The average annual growth rate of China’s GDP reached9.8%between1978to2007, significantly higher than the world’s economy average annual growth rate of3%. Meanwhile, China’s infrastructure has got a great development in physical form and stock levels. But at the same time, a series of problem, such as the unbalanced space distribution of Chinese economic activity and the gap of regional development is expanding, have got more and more serious.Based on the block the world of new economic geography, through extend the footloose capital model, this study attempts to research the logic mechanism between infrastructure and space distribution of economic activity, transfer of industry, regional economic growth, the convergence of regional disparities; and discuss the effect of different subsidypolicies by track the flow of transfer payments. The third chapter discusses the influence of infrastructure on regional economic growth and the convergence of regional disparities under the different heterogeneous condition, agricultural transportation cost and the growth condition. The fourth chapter discusses the optimal choice of transportation network after endogenesis transport cost under several regional model. The fifth chapter compares the policy effect between the transfer subsidies to enterprises and workers. In the sixth chapter, using spatial econometric model we give empirical test under the panel data of31provinces in1998-2011years and1999-2010years of216prefecture-level city.In the theoretical research, we obtained the following main conclusions:(1) the improvements of internal infrastructure are conducive to local economic development; the improvements of regional infrastructure are good to the developed areas, and will expend the gap of regional development. Relative to the backward areas, developed areas have more initiative to improve the infrastructure, opposite the backward areas always are passive in infrastructure improvements. Only under the badly conditions infrastructure in developed regions, the backward regions can realize the idea of beyond developed regions, but this probability is very small.(2) The exists of migration cost, heterogeneity of consumer preference and firm productivity only change the sensitivity between industrial space distribution and infrastructure, but cannot change the situation of space distribution.(3) The agricultural infrastructure improvements in developed regions will reduce the industry share, but will raise the income level of workers and the real level of GDP, so in developed regions government have to face a dilemmatic policy choice between industrial development and increase the income of residents. In backward regions agricultural infrastructure improvements have not favorable effect to attract investment and increase industrial share, but is good to increase real income and reduce regional development gap, so the choice of agricultural infrastructure improvements is the dominant strategy.(4) Public knowledge infrastructure has strong spatial spillover effects, it can increase the social economic growth and welfare but cannot change the economic activity spatial distribution and regional gap.(5) When the distribution of three regions are equilateral or isosceles triangle, the choice of transportation networks tend to favor the developed areas under the maximization of social welfare. Base on the average per real income, always exist the zero-sumgame:the choice of transportation network can increase average per real income in one regional but may cause losses to other regions. Even for the same region under different conditions, the preferences for different transportation networks are also different, it is difficult to reach a dominant strategy choice.(6) In all kinds of subsidy policies, the policy of subsidies to enterprises will lead to the separation of attracting investment and narrowing the regional gap. The policy of subsidies to workers will lead to narrow the regional gap, and has a low requirements on the differential tax rate and stronger financial feasibility.In the empirical test, we obtained the following main conclusions:(1) In China’s eastern region the infrastructure is better than central and Western regions no matter in physical form or stock level, and exists the characteristics of relative disparity convergence and absolute gap expend.(2) Public infrastructure investment is conducive to the overall economic growth, and in different regions the different infrastructure have the different output elasticity and spatial spillover effect. From the spatial spillover effect relative to the formation of physical infrastructure, the soft power of the educational infrastructure has stronger spatial spillover effects.(3) Since1998the TFP of China’s provinces show the overall upward trend and the spatial clustering distribution of East high and West low. The infrastructure of institution and environment has a significant impact on TFP, but the influence of physical infrastructure on TFP is not significant. From the spatial effect, the spillover effect of TFP is significant, the TFP increase of surrounding regions are good to TFP increase of local region.(4) China’s economy has a characterize of club convergence in the East, centre and West, and the gap between the cities is maximize in the East, middle in the West and minimum in the West. From the convergence speed, during1999～2010the East is0.31%～0.34%, the West is0.35%Y0.38%, the centre is0.17%～0.25%. From the half-life-cycle perspective the East is203～221years, the West is183～200years, the centre is278～397years. In different regions and different types of infrastructure has different effects on economic convergence. But soft environment has greater effects than physical infrastructure on the gap between the convergence.According to the conclusion of this article, combined with the practice in china, we get the following policy implications in4aspects:(1) The eastern region should make greater contribution in regionalinfrastructure construction, the central and western regions should pay more attention to the local infrastructure andagricultural infrastructureconstruction.(2) We should adhere to the principle of efficiencypriority,and construct the transportation network system as the core of eastern region. And meanwhile the eastern region should subsidy the western region.(3) Setup the different tax system in the eastern and Western regions, and the mainly workers subsidies form.(4) The central and western backward regions should further strengthen the infrastructure investment, especially to cultivate the education and other soft power system.