Government Acting And Regional Economic Convergence

Economic growth convergence theory has become one of the most popular topics in economic growth theory since the 1990s.The core of this issue is inspecting the economic growth rate of different economic bodies to forecast the tendency of the economic differences in different regions. Is it going to disappear or will exist for a long time? Different scholars have given different judgements.For China, a large number of regions and significant economic disparities which has significantly widened sometimes across regions, this topic is particularly realistic. China's regional economic disparities have leaded an upward trend since the nineteen nineties and the economic gaps between the three regions such as China's eastern, central and western regions has increased significantly. Many scholars have done researches on the issue of regions disparities widely and profoundly. But few scholars have done researches on the issue in the aspect of government and economic convergence. In fact, the government has gradually realized the seriousness and difficulties of the problems of China's uneven regional economic development.And the government has adopted a series of policies, including fiscal policy reform and developing the regional strategies such as the western development drive, revitalizing the traditional industrial base of Northeast China, and the rising of central China.These policies are aiming at promoting the balanced development of China's regional economy.Based on the former research fruits, this article is intended to research on what roles the government has acted to the convergence of China's economic growth. Government acting involves pubic expenditure and institution.In this paper, the writer has used methods of theoretical exploration and empirical testing in order to study on the issue. First of all, the article has studied about the possibility of economic growth convergence and the convergence mechanisms from the government's acting based on the Solow Growth Model and New Economic Growth Theory. Secondly, this paper has made empirical analysis with the samples based on a certain period of Chinese provincial panel data, and then has calculated the effects of policies implemented by the government to the economic growth convergence.Through empirical analysis, this paper received the main conclusion:(1) there is no absolute convergence in China's regional economic growth and the regional economic growth shows a divergent trend in general. It means that the economic gaps between regions are widening these years. (2) When considering the variables such as purchase expenditures, transfer payments and market-oriented index to analyze the convergence, the conclusion is:purchase expenditures and transfer payments not only failed to reduce regional economic disparities, but also enlarged the gaps.Finally, the paper analyzes the problems of government acting which involves pubic expenditure and institution to promote economic convergence, and on this basis, the paper gives some policy recommendations:the pubic expenditure should involve more public functions and the government should speed up the market process of central and western areas.