| The dual economic structure of developing countries is the key to economic development issues. Traditional dual economic researches which were only carried on in the classical or neo-classical framework mainly studied the role of capital in the uneven development of economy, and didn't include financial development. The traditional theory of financial development focused mainly on the financial development and economic growth but didn't pay sufficient attention to the relationship between financial development and economic structure. The dual economic theory and theory of financial development haven't provided adequate theoretical basis for developing countries. China is also facing the problems of dual economy transition. How to make good use of the financial functions to support the dual economy transition is an important and pressing task. Therefore, the research of financial development and economic restructuring of the dual economy has not only theoretical but also practical significance.In this paper, the study objects are financial development and geographical dual economic structure (hereinafter referred to the dual economic structure) of developing countries. Research ideas are as follows: First, construct the article's theoretical framework connecting with the developing finance and economy theory to study the relationship between financial development and dual economic structure, and build mathematical model to prove the conclusions drawn from the theoretical analysis. And then, the theory will be applied to China's reality to analyze China's financial development and the dual economic structure; in light of China's data, use quantitative and empirical method to test the conclusions resulted from theoretical and model analysis. According to this idea, with the exception of the introduction, the whole dissertation can be divided into four parts: theory and model, the reality of China, empirical analysis and policy recommendations. Accordingly, this paper mainly consists of four chapters.The first chapter includes theoretical and model analysis. First, it analyzes the financial causes to the dual economic structure in developing countries. It holds that the interaction between economy and finance, as well as government intervention are important reasons causing the dual economic structure. And then it concludes that there is an inverted "U" relationship between financial development and dual economic structure. Furthermore, it demonstrates the role which financial development plays in promoting economic restructuring of the dual economy. Finally, it establishes a mathematical model based on Schumpeter's innovative theory to prove the above conclusions. The second chapter mainly studies China's realities, and holds that China's dual economic structure hasn't expressed significant signs of weakening following the financial development. And the differences in regional capital formation, dual financial system, unified monetary policy and the Government's improper intervention are main financial reasons to dual economic structure.The third chapter carries on empirical analysis, including time series and cross-section data analysis. The analysis shows that China's financial development has not promoted the dual economic transition, but further exacerbated the dual structure since 1985. At present the level of dual economic structure and financial development is in the upward phase of the inverted "U" curve. Around 1998, the relationship between China's dual economy and dual financial structure changed. The convergence of regional differences in the level of financial development had not promoted the dual economic transition before 1998. But after 1998, the convergence began to play an active role in the dual economic transition.The forth chapter consists of policy recommendations. It suggests that China should continue to push forward the reform of financial system, strengthen financial support to the backward areas and improve their financial institution system. |
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