Research On The Interactive Effect Of China Urbanization Level And Economic Growth

Urbanization is the inevitable result of economic and social development, also is the only way to achieve modernization. Economic growth can improve the level of urbanization, in turn, the improvement of urbanization level will also boost economic growth.For China, urbanization is not only simple to realize the transformation of the dual economic structure to a dual economic structure. It is a strategic measure to resolve the current lack of effective demand and promote the long-term stable economic growth. China is in the key stage of the economic system transformation by now. Discussing the interactive effect between urbanization level and economic growth, which have far-reaching significance for improving the level of urbanization and guaranteeing sustainable and healthy economic development.In order to investigate the mechanism of action and the effect between urbanization level and economic growth, this paper adopts the combination of the theoretical research and empirical research, and the combination of the qualitative analysis and quantitative analysis method on the basis of predecessors’research results. On the basis of time series data in our country from 1978 to 2012, we set up the vector auto-regression model. Then we use co-integration test to inspection whether it has long-term equilibrium relation between urbanization level and economic growth, and use granger causality test to discuss the causal relationship between them, and apply impulse response function and variance decomposition to analyze the dynamic effect between them. To cover the shortage that time series data contains only two-dimensional information-time and index, we introduce panel data of 31 provinces, municipalities and autonomous regions from 2000 to 2012 and set up fixed effects variable coefficient model. Then we use the model to quantitative research the differences of urbanization level contribution on economic growth in different areas, and the differences in the contribution degree to urbanization level of economic growth.The results show that there is a long-term equilibrium relationship between urbanization level and economic growth in China. Economic growth is the granger reason of the improved urbanization level, but improving urbanization level is not a granger reason of economic growth within a certain range lag. Do exist the relationship of mutual promotion between urbanization level and economic growth. However, the positive effect of economic growth to urbanization level is significantly stronger than the reverse impact of urbanization level to economic growth at the present stage. Furthermore, the influence of raising the level of urbanization on economic growth has a certain lag. The economic developed areas urbanization level are higher, the influence of a higher level of urbanization on economic growth is obvious. Economic less developed areas urbanization level are lower, the lower level of urbanization limited impact on economic growth.Each region has different regional urban type, different geographical location and different development model. So the urbanization level and economic growth has different mutual effect and direction in different regions and different time. On the basis of the above analysis, we put forward that in order to ensure the coordinated development of urbanization and economy in our country, the government should adjust the urbanization development strategy timely and change the way of economic growth, and formulate development strategies suited to their own characteristics in various regions.