The Comparative Analysis Of Economic Growth Between Hebei Province And Shandong Province

Since the Reform and Opening, the growth rate of China’s economic is rapider. However, originating from the geographic location, population structure, resources and other factors, the economic development of different regions shows various characteristics. At first, provinces located at the eastern coast of China, from manufacturing started, lead economic growth of the nation. In recent years, Inner Mongolia, Xinjiang and other provinces with resource advantage, is developing their economy with a high speed. After the four trillion investment of government, every province should early found itself in economic development advantages and disadvantages. Analysis on several provinces is more complex, through this mean, comparing to discover the problem also more difficult. Therefore, in this paper, we choose two provinces with common conditions but different economic development levels, by comparison to find the advantages and problems of the economic growth of the two provinces.Hebei province and Shandong province are two important provinces with large population in China; they are very similar in many aspects such as geographic location, population density, and both of them are around Bohai Sea District. But divided from economic region, Hebei province belongs to the middle province, economic development speed is inferior to Shandong province, while Shandong province is a typical representative of the eastern coastal provinces, the growth rate of per capita GDP and per capita income is rapid. Therefore, this article attempts to analyze the difference of the economic development of two provinces from the elements perspective. Endogenous economic growth theory has made great achievements in the study of economic growth; the reason of technology progress endogenous has been explained more fully, so this paper adopts the endogenous economic growth model to analyze the difference of two provinces in economic growth.Using the endogenous economic growth model, this paper compares economic growth of Hebei and Shandong. In this paper, as GDP is the dependent variable, in the analysis of Hebei, the independent variables we retained are capital, labor input, human capital level and industrialization level, and in the analysis of Shandong are capital, labor input and the level of urban.In the part of empirical research, through the construction of the endogenous economic growth model, I analyze the different production of various factors for the two provincial economic growths. In order to understand the cause of the different economic development and explore the problems of the economic development of the two provinces, I analyzed the model. The part of empirical analysis, at first, through the ADF test to test data stationary, provides the basis for co-integration model’s establishing. And then through the stepwise eliminating method eliminace variables that have little effect on the GDP, at last remain fewer variables, to explain the causes of economic growth. Through the theory of endogenous economic growth model’s establishment, with the error correction model to test the endogenous economic growth model with self adjusting mechanism.Through the establishment of the endogenous economic growth model, we can conclude:Hebei Province in the element investment of the production is not adequate, keeping in increasing returns to scale stage in long-term; and the Shandong economy is in decreasing returns to scale, investment and labor input are surplus in long-term, but if they can guarantee that the marginal output is greater than the marginal cost, maintaining economy to continue healthy growth is not difficult, In the models of both provinces, the stock of capital and labor input are decisive roles in economic growth. Human capital level and industrialization level has great influence in economic growth of Hebei province, Hebei province, in the process of economic development, should pay more attention to increase the knowledge of laborer, improve worker’s technology; at the same time, consider the optimization of industrial structure. The urbanization has great influence on the economic growth of Shandong province; Shandong province in the process of economic development should pay attention to urban and rural economic structure’s influence in the economy, provide more employment opportunities for recessive unemployment peasants.The innovation of this paper:It’s first time through the establishment of the endogenous economic growth model to compare the difference between Hebei province and Shandong province in economy growth, many researchers have studied separately one country or one province in economic growth, however, there is few articles which by comparing the two provinces to analyze their economic development advantages and disadvantages; Despite the Constant returns to scale assumptions, through the comparison of returns to scale of the two provinces, I analyzed the difference of factor input level, and their influence in the economic growth.The inadequacies of this article:the measurement of human capital stock has some deficiencies, the index can not accurately measure the true level of human capital; the depreciation rate in the capital stock estimation is chosen subjectively, initial capital stock instead by previous estimates, is too simple; error correction models can not interpret the self-regulation mechanism of the endogenous economic growth model very well.