Impact Of Opening Up On The Regional Economy Imbalance

In the past thirty years, China's economy has been achieved outstanding success. High economic growth rate has made China the 2nd largest economy in the world, which improves the whole national welfare and strengthens our international competitiveness. However, development imbalance among areas has become a big threat to China's future stable and sustainable development. Lots of scholars have been trying to figure out the reasons through the research on the factors contributing to the economic growth, such as the resources, development history or the policies. Since the reform and opening up policy, especially the export-oriented strategy has contributed a lot to China's economic growth, scholars began to doubt whether different areas or factor owners has got reasonable distribution from the great overall achievement by opening up. This paper also aims to explain the relation between the gap of opening up and regional economic growth from a new view. Since China adopted the imbalanced development strategy when she promoted the opening up at the first stage, the levels of opening up between different areas now vary a lot. Besides, the contribution of opening up on economic growth would be influenced by the regional economic environment. Therefore, the effectiveness between opening up and economic growth are both affected by the quality and quantity of opening up. Our paper will then analyze the contribution of opening up on regional economic gap both through the difference of quality and quantity. Firstly, our paper would establish a growth function to verify the positive influence of trade and FDI on the national or regional economic growth, and then some dummy variables are added to discuss the efficiency of the opening up's contribution on growth among different areas, like coastal or inland areas. The comparison shows that the role of opening up in regional economic growth is more significant in eastern coastal areas and the analysis of impact mechanisms, such as factors accumulation, technology spillover, industry agglomeration and political evolvement, has also stated the fact from the actual situation that the efficiency of opening up in promoting the economy would be impacted by the regional economic environment. Hence, we use the coefficient of variation and Theil Index to calculate the degree of imbalance and discuss the relationship between imbalanced opening up and regional economy in different periods. The cointegration test then shows that trade difference has a much more active role in promoting the economic difference than FDI does. In the final part of our paper, we use Shapley Value to decompose each factor's contribution on the imbalanced regional GDP per capita and find that trade difference has already been the 2nd largest contributor after local fixed investment. The imbalances in opening up and regional growth have been easing these years, but still stay in a high level. Therefore, accelerating the opening up in some inland areas and improving the efficiency of trade and FDI in promoting regional economy would be quite important and beneficial in easing the regional imbalance.