The Economic Convergence In Fujian

Since the founding of PRC in 1949, the economy of Fujian Province grew slowly for the reason of military confrontation across the Taiwan Strait. Thus, there are many factors leading to this situation. One of the most important reasons is that Fujian has such inconvenient traffic that the cost of the construction of the infrastructure is too high. At that time, the central government argued most investment to Fujian is not worthy, so the construction of the infrastructure is poor. Moreover the two sides across the Taiwan Strait were at war so there were no preferential policies and financial support to Fujian. In this way, the growth rate of Fujian is slow compared to Yangtze River Delta and Pearl River Delta.In 1980s as china evolved from a central economy to a market-driven economy, Fujian also has a golden opportunity. Its growth rate is striking which makes Fujian one of the provinces in China with the fastest economic growth.. The output and GDP per capita respectively ranks 12th and 7th in China.However, with the rapid growth, the cities in Fujian turned out to be different in economic growth. According to Economic Growth Pole Theory, what is important to an economy in the early stages is its rate, but when the development reaches a certain level, one should focus on the balance of the whole members in the integrity, or it will cause a lot of social problems that diminish the economy of all regions. In this way, I suppose that the research of the development of various regions in Fujian Province in recent years is significant.The author introduces the concept of the economic convergence which derives from the neoclassical growth model (Solow,1956). The main conclusion of this model is that the further an economy stands from its steady state, the faster growth of GDP per capita income it will get. Eventually, we will see the the country with low per capita income at the initial state will catch up that with the high GDP per capita at first. The paper is to study the development of various regions in Fujian Province, that is, the trend of the development of Fujian. Whether it has a trend of economic convergence or not is important to us. If the convergence doesn't exist, what can we do with it or vice versa. This article is divided to the following sections. First, the paper reviews the economic convergence growth theory at different stages of the development of economics. Then, the author shows an overview of the socio-economic situation of Fujian. Finally, the paper uses a model based on the new growth theory to study the trend of the economic convergence in Fujian with the data over the past ten years (1990-2007). Then, the paper will give some policies and suggestions according to the empirical result of the model. I hope the dissertation will make some contributions to the construction of the West Strait Economic Zone.