Financial Development, Division Of Labor And Economic Growth

Many economists, using by variety models, have analyzed the relationship between financial, division of labor and economic growth. They had made major breakthrough in the theoretical research and empirical test. However, most existing literature almost had study either the relation between the financial and economic or division of labor and economic. There is academic research space to system research and test of the relationship between the financial, division of labor and economic. In the current world, all developed countries (excluding petroleum exporting countries) have a strong system of financial and industrial division of labor. China has high-speed economic growth for30years and obtained the amazing achievement. It was important for high-speed economic growth to have capital investment and industrial structure. And capital investment and industrial structure, to a great extent, was determined by the division of labor and the financial system. Thus, there was close relationship between the financial development, division of labor and economic growth. So, in China, how the division of labor and the financial development has impacted on economic growth? How the mechanism and the way of the division of labor, the financial and economic growth has produced? Is there a positive relationship between the financial development and division of labor each other and so on? These problems'studying not only is necessary for expanding relevant theories but practice needed. This paper system analyzed the new theme from the theoretical interpretation, the empirical test and suggestions et al.The paper, by static benefits and dynamic effect perspective, analyzes the internal mechanism of division of labor to promote economic growth. Based on the framework of the classical economic growth theory, the financial function theory and endogenous economic growth theory, the paper analyzed the internal mechanism of financial development to economic growth. The framework was insisted of financial development, division of labor and economic growth based on the division of labor theory and provided feasible theoretical basis for empirical testing. Furthermore, based on measurement methods, time series and provincial panel data, we respectively analyzed, from the national and regional perspective, the relationship and conductive effect of financial development, the division of labor and economic growth in China. The results of this study were as follows. Firstly, we found that the financial development, the division of labor and economic growth had mechanisms which the efficiency of commodity trading and financial loans had important influence on the division of labor depth and economic growth. The financial system not only promoted the division of labor evolution but long-term economic growth and benefit from the division of labor. Moreover, financial system through the way such as capital, labor and technology influenced the long-term economic growth. But the division of labor has promoted long-term economic growth by means of the technological progress and specialization. Secondly, from the national perspective, economic growth is obviously driven by financial and both are contributing factor. For long term, financial development on the promotion of division of labor was significant, but in the short term, the division of labor and financial development promoted each other. Financial development made much greater contribution to economic growth than the division of labor and it was an important driving force of economic growth. Conduction effect showed that capital and labor input, saving rate, savings into investment and capital allocation rate were significant pathways between financial development and economic growth, but division of labor only played promoting effect on economic growth through savings into investment. Trading technology and trading system were significant pathways between financial development and division of labor. Thirdly, from the perspective regional, in the eastern regional, the division of labor and the financial development had significantly effect on economic growth, but not as good as the central and western regions. In the northeast region, the division of labor is an important force to economic growth. Conduction effect showed that, in the eastern regional, the financial development had obvious conduction effect on economic growth through labor and technology progress but that of the division of labor was not obvious. In the central region, financial development promoted economic growth by capital allocation rate and capital investment, but that of the division of labor were capital investment and high saving. In the western region, the financial development and division of labor by capital, labor, technology, saving and capital allocation rate had hardly impact on the economic growth. In northeast regional, the there were four pathways such as capital, technical progress, savings and savings investment rate between the financial development and economic growth, but the division of labor is only turn savings investment. At last, the paper had exposited the difference of contribution from the financial development and the division of labor to economic growth. There were probably many reasons for this difference. Firstly, the difference of the financial development policies, financial resource allocation and spatial distribution led to the regional financial difference which had affected the relationship between the regional division of labor development and economic growth. Secondly, the financial division of labor difference created structural imbalance of the regional economic growth. Thirdly, transaction efficiency resulted in regional economic growth difference. At last, division of labor was the basis of industrial cluster formation and development. The division difference contributed to unbalanced development of the area industry cluster which influenced on the regional economic difference.There was much innovation supporting my study:first of all, it set up new theory model to analysis the internal mechanism and pathway between the economic growth, financial development and division of labor from the perspective of division of labor. Moreover, the direct influence and conduction effect of this internal mechanism and pathway was empirical test in view of the national and regional two aspects.In addition, it was build new index of the financial development, division of labor, trade technology and so on. The results showed that the new index gained stronger explanatory.