Theeconomic Logic Of Synchronization Among Industrialization, Urbanization And Agricultural Modernization

Industrialization, urbanization and agricultural modernization in a developing country, are the concentrated expressions of reallocation of resources in the process of economic transformation. It has profound significance to make clear the prominent determinant of which one should be the priority for framing the economic developing strategy of China. This paper uses a two-sector neoclassical economic model for the study of the relationship among the industrialization, urbanization and agricultural modernization, and adds in the transfer cost of labor into the model, and researches on the mechanism of urbanization from the surplus grain, the share of gross fixed capital formation, and the agricultural capital investment. Based on time series data of China, no Granger causality relationship has been found among the share of urban population, the share of gross fixed capital formation, and total power of farm machinery, but the share of gross fixed capital formation, and total power of farm machinery are Granger causes of the share of non-farm payroll employment. It might be affected by the existing of township enterprises. Afterwards, based on the multinational panel data, we have found that, per capita cereals output has a positive effect on urbanization, even when the net imports of cereal have been controlled. Meanwhile, there is significant positive relationship between the net imports of cereal and urbanization. Additionally, the share of gross fixed capital formation and the using of agricultural machinery are also significantly and positively correlated with the urbanization. Therefore, for the synchronous development of industrialization, urbanization and agricultural modernization, China should increase the capital investment of the agricultural department, and open wider in the agricultural markets in the premise that keep necessary grain self-sufficient rate, promote township enterprises to agglomerate in cities, and improve the efficiency of investment.