Comparative Study Of Production Returns To Scale Of Urban In Four Regions Of China

New growth theory and new economic geography emerged from 1990s use technological innovation, increasing returns, transport cost and their interaction to explain developmental disparity between regions in the framework of imperfect competition. Traditional new neoclassical economic theory considered the perfect competitive market and the constant returns to scale as the assumption, and said that comparative advantage determine international trade and external factors determine the level of economic growth. Then many scholars developed a new method which considered the return to scale is changed and imperfect competition market as the basis of the theory, and become the important theoretical foundation of new growth theory and new economic geography theory. Because of it, new theory of economic geography developed. In recent years, many scholars conduct research on this problem that returns to scale is variable or constant, but it’s less that small parts of scholars research the factors which affect returns to scale. So, we conduct an empirical study of returns to scale of economic activities in manufacturing and services of urban and regional level with data of 270 cities in China in 2014 based on the new economic geography and regional economic growth theory. It is found that:(1) output elasticity with respect to labor of manufacturing and services is positively related to urban capacity in technological innovation; (2) output elasticity with respect to capital of manufacturing and services is positively related to population density and negatively related to transport cost; (3) among 270 cities, there are 267 cities’ returns to scale of manufacturing and services have the characterized of scale elasticity above 1, which means economic activity of manufacturing and services in four regions of China has the typical characteristics of increasing returns to scale; and (4) returns to scale of urban manufacturing and services de-escalate in the order of East China, Central China, Northeast China and West China, which offers support to Yang Kaizhong’s argument of West China’s Diseconomy in Spatial Framework in explaining cross-region disparity in development in China.The author describes the background of the topic, analyzes the status of China’s four regions, and elaborates the development from trade theory to new economic geography theory, and empirical analysis on returns of scale. And then give some advices according to the final results:First, strengthening the scientific and technological skill on underdeveloped areas, and encouraging the flow of talent to undeveloped regions.Second, reforming the population density, that is guiding the flow to the local urban which the population density is low, but local resource conditions is better, concentrating the talent, and then promoting the local market effects.Third, promoting the transport development in underdeveloped areas, improving the infrastructure and create good geographic conditions to attract investment and talent, and then forming a virtuous path dependence.