The Study On Capital Flow And Its Effect On Regional Economic Disparity

Economic development is inseparable from land, capital, labor, technology and other production factors, and is subject to the endowment and the ability to integrate elements of gathering. Some of the production factors nurture from self-accumulation, some factors come from external inflows. Therefore, the influence of factor mobility on regional economic disparity should not be overlooked.Under the planned economy, capital(funds) configuration relies on central planning authorities to allocate the arrangement, the flow of private capital and foreign capital is strictly controlled. After the reform and opening up, more and more attention to the government market mechanisms in resource allocation effect of a gradual increase in the freedom of capital, the eastern became capital inflow parts, other areas became capital outflow parts, resulting in expanding our regional economic disparity. In recent years, the condition improved gradually in inland areas, such as infrastructure is completed increasingly, the market potential is mined gradually, industrial structure is optimized urgently, prompting some capital, labor, technology and gradually flows inland areas, industrial transfer steadily, inter-regional economic slowly narrowing the gap.Articles focus on the impact of capital flows on regional economic disparity. First, according to the new economic geography theory, we investigate the mechanism of capital flows affect on regional economic disparity. Under different conditions of trade costs, capital flows affect the results of the regional economic landscape. Theoretical analysis shows that the main factors of causing the capital flows including trade, labor remuneration, industrial layout and size of the market. Then, we using Granger causality test, examine the causal relationship between labor, capital and regional economic disparity, the result shows that there is a significant causal link between the capital and regional economic disparity. Finally, we analysis the region of 1994-2013 level panel data on capital flows and regional economic disparity, the results confirm that capital flows are various channels have a significant impact on regional economic disparities. At the same time, we use gray network model, testing the relationship among trading costs, labor remuneration, industrial layout, markets scale and capital flows, showed that the cost of trade, industrial layout are closed to capital flows. Based on this, we proceed from the control of capital flows, proposing to reduce regional economic disparity, hoping to coordinate regional economic and build a moderately prosperous society.