An Analysis Of Dynamic Econometric Relationship Between Urbanization And Economic Growth In China

Since reforming and opening, China acquires world-shaking achievement, makes further progress in economic growth, social progress, urbanization development and so on. China undergoes the course of society transformation from agriculture to industry, and labor force transformation from countryside to urban areas. From 1978 to 2006, the urbanization level rose from 17.92 percent to 43.9 percent, increased 0.88 percent per year, and town population raised from 172,450,000 to 559,830,000, increased 387,380,000, increased 137,200,000 every year in average. There is no doubt that such large-scale population transformation would produce tremendous and far-reaching influence on economic growth. The urbanization development is a quite complex and enormous social economical dynamic system. As the development of economy, the urbanization development load in China changed from "control big cities strictly, develop small-middle cities reasonably" to "develop big middle small cities and small town with harmony". It has been recognized still in dire need of solving, that is, how to measure the effect and influence of urbanization development.This paper tries to do some reach from this point of view. We apply modern economic measure instrument, to explain the effect and influence of urbanization to economic growth in China, as well as the validity of urbanization development road changeover by data, which aiming at providing academic reference for relative administrant department.This study explores the relationship between Chinese urbanization and economic growth. To this end, some econometric methods such as cointegration, Granger causality tests , IRF and variance decomposition are used to analyze t he data from 1978 to 2004. The result s show t hat economic growth is the Granger causality to urbanization in a long term. Economic growth makes great impact on urbanization, but urbanization makes little impact on economic growth. The change of urbanization is intensified by GDP per capital, but weakened by it self. The change of GDP per capital is intensified by it self, but weakened by urbanization. In the end, recommendations are discussed for government s to facilitate urbanization and economic growth.