A Research On The Relationship Between Urbanization And Consumption From The Global Perspective

Since the financial crisis,China has began to focus on stimulating the economy "troika"--the irrational proportion of investment,consumption and exports.The model of "investment + export" can not meet the needs of economic development, expanding domestic demand is the only way to ensure the constantly increasing in economy. At the same time, urbanization has been repeatedly included in the national important planning documents,obviously urbanization plays an important role in boosting the economy of the city. However, in the period of rapid development of urbanization, more and more people began to query the superiority of urbanization, with it, scholars began to deny its advantage in promoting the economy.Studying the impacts of urbanization on the consumption will not only conduct a better develop plan for China to develop, but also help us to learn the experience from the western country.In this paper, the author uses the data from the World Bank’s international database to analyze the relationship between urbanization and consumption by doing an empirical research. Firstly, by doing the general observation and comparation of two different country- China and the United States, coming up with the main hypothesis of this article: There is a U-shaped nonlinear relationship between urbanization and consumption, that is, when there is a low rate of urbanization, urbanization inhibiting the growth rate of consumption, on the contrary, when urbanization meets a maturity period, the development of urbanization will help to improve the consumption. Then, establishing an empirical model and analyzing the development of the phase of urbanization and the relationship with consumption.The empirical results show that the quadratic coefficient of urbanization is positive, indicating that there is indeed a U-shaped relationship between urbanization and consumption. Besides, the analysis of Urbanization shows that: when the urbanization rate is over 70%, the higher rate of urbanization is, the higher the consumption rate is. However, when the urbanization rate is insufficient, between 30%-70%, things become different--the higher the rate of urbanization is, the lower the rate of consumption is. This provides the evidence-- U-shaped relationship between urbanization and consumption. Thus, this paper proposes the idea that the development of urbanization will ultimately promote the growth of consumption, it is conducive to economic development,however, it is necessary to pay attention to the problem that we may meet during the process of urbanization, we should choose the right way which is suitable for the Chinese national conditions.