Monopoly,Economlc Diversity And Regional Economic Growth:in The Case Of The Eastern, Middle And Western Areas Of China

During more than30years’ reform and opening up, China’s economic development has made great achievements, but also faces many problems. One of the more important issue is that the gaps of the economic growth of the eastern, central and western areas of China is widening rather than narrowing, the eastern region’s economic growth is much faster than the middle and west regions. For a long time, the government and scholar have been focusing on this phenomenon reason.To explain this phenomenon, this paper attempts to adopt a new perspective (evolutionary economics) to study why there is a difference among the eastern, middle and western regions’economic growth, or why the convergence trend of economic growth is not obvious. Evolutionary Economics’theory suggests that the economic diversity will promote economic growth, but monopoly inhibits the growth of economic diversity, and thus indirectly hinders the rate of economic growth. On bases of evolutionary economics theory, this paper proposes a new theory:due to many non-market factors, there are differences in the degree of monopoly among the Eastern, middle and west areas, that is the degree of monopoly in eastern is less than that of the middle and west areas, resulting in the degree of economic diversity in the middle and west regions is far lower than the eastern region, ultimately resulting in the eastern region’s economic growth is faster than that of the middle and west areas.This paper adopts the data of30provinces of China, and this data is from2003to2011. In this paper, we use the static panel data model and dynamic panel data model, testing the above theoretical assumptions. From the empirical results, the hypothesis proposed in this paper has been well validated:economic diversity (product variety, enterprise variety and industry variety) have a positive role in promoting economic growth; and due to many non-market factors, the monopoly caused by Schumpeter competition will exist for a long time, resulting in economic diversity is reduced and this inhibits the growth of economy. At the same time, when we take the first derivative of the economic diversity, we find that the economic diversity’s promoting for the economic growth depends on monopoly:the higher the degree of monopoly, the lower the effect of diversity on the economy. Thus, we can explain why the eastern region’s economic growth rate will be higher than that of the middle and western regions. Due to the degree of monopoly in the eastern is lower than that of the middle and western areas, the economic diversity in eastern region is higher than that in the middle and western areas, and ultimately this makes the eastern region’s economic growth is faster than that of the middle and west areas.Therefore, some suggestions put forward by this paper include increasing the diversity of the economic, namely increasing product variety, enterprise variety and industry variety; and restricting the monopoly.