Infrastructure And Economic Development - China's Regional And Urban And Rural Research

Infrastructure is the basis of economic development and modernization. The situation of the infrastructure has a decisive effect on the economic structure of a country or a region and further on the level and speed of economic development and process of modernization. There is close relation between infrastructure investment and economic growth and research on infrastructure has always been an eye-catching issue.Both theoretic research and practical experience indicated that a country's infrastructure service had a very important effect on the stable development of economy in the long term, especially for developing countries like China where infrastructure had ever been the "bottle neck" for economic development. The World Development Report published by World Bank in 1994 pointed out that infrastructure capital stock had substantial effect on economic growth, which provided helpful guidance and important foundation for research on infrastructure. Since then, many economic researchers have devoted themselves into research in such respect and made great contribution to make it clear the relation between infrastructure investment and economic growth.However, research on the effect of China's infrastructure on the economic development is still quite limited. Therefore, the current situation of China's infrastructure and what impact it has on the economic development become the questions we are concerned for in this article.What is the infrastructure level of Eastern, Central and Western regions and of urban and rural areas? Is there any difference between the level of different regions and between urban and rural areas? This article answers such questions through statistical analysis. By collecting abundant statistical material, the article analyzes and compares the difference of infrastructure level between different regions and between urban and rural areas and put forwards that:(1) There is small difference between Eastern, Central and Western regions from the side of aggregate level of transportation infrastructure but the transportation density of Western region is much lower than that of Eastern region. Moreover, no obvious difference between different regions can be seen from the aspects of both aggregate and per capita level of energy infrastructure. Furthermore, there is obvious gap between Eastern and Western regions of communication infrastructure.(2) There is small difference between urban and rural areas of energy infrastructure from the aspect of aggregate indicators but the per capita energy consumption level of rural areas is much lower than that of urban areas. Moreover, with the development of communication infrastructure these years, the aggregate level of rural areas catches up with that of urban areas and the difference of the per capita indicators between urban and rural areas is getting narrower.On the basis of statistical analysis, we analyze the impact of infrastructure on China and regional economic growth by practical analysis. Firstly, according to research methods of recent literature home and abroad, we examine the elasticity of output of the infrastructure capital stock and verify that infrastructure has significant effect on China's economic growth. Moreover, in order to further analyze the varying contribution of different types of infrastructure to the economy of Eastern, Central and Western regions, we add infrastructure variables into production function, analyze their elasticity of output and interpret such elasticity as externality of infrastructure out of normal capital stock. We use fixed effect model to analyze the provincial panel data and indicate that: Firstly, infrastructure of all types has strong externality to Eastern region. Moreover, transportation and urban infrastructure has a supportive effect on the economy of Central region. At last, communication and urban infrastructure has above average productivity than other capital in Western region.Based on the above conclusions, this article makes some simple policy suggestions for the government on infrastructure construction in different regions and urban and rural areas. For instance, we suggest that the governmental investment into Central and Western regions should be increased and more attention should be paid to the industries which have significant externality to regional economic growth. Moreover, we propose that the government should increase the infrastructure investment into rural areas and collect the funds for urban areas in different forms and from the markets.