Impact Of Capital Echo On The Differences In Regional Economic Development

Since the implementation of the western development strategy from the state,the purpose which will accelerate the development of the central and western regions to narrow the gap between the eastern and western regions is the State overall situation,facing a major decision to make in the new century.However,with the implementation of the western development strategy so far beening more than ten years,the gap between eastern and midwest has not narrowed,but the trend of expansion is presented.Because the regional factor endowments varing greatly in our country,there are more resources and labor in the western than in the eastern,on the contrary,there are more capitals and technicals presentation of the East than the West.In this way,the eastern coastal developed area depending on the superior location conditions of natural absorbed a large number of high-quality elements from the western resgion,causing great imbalance between eastern and western.On this basis.this paper introduces the echo effect which was advanced by the winner of the Nobel prize in economics named Gurmar Myrdal in 1974 to research the relationship of the capital return and the difference of regional economic development.Firstly,through combing the related theory of the capital and the economic growth theory and capital return and the differences of regional economic development and the capital return mechanism and the echo channel analyzed,the inherent power of capital return is the capital profit-driven and inter-regional differences in the rate of return on capital.And the return channel is stock market and bank lending system.Then the securities market financing and new bank loan to deposit ratio are as two variables to measure the capital return.On the basis of the extension of the Solow model,the amount of capital return is extended to the economic analysis framework to construct the theoretical model.Secondly,the article refers to the traditional classical model to verify the existence of capital echo test.Through the capital mobility research and analysis,it verifies that there is indeed a massive flow phenomenon of capital in the three regions of China.Again,based on the analysis and through trading in the national accounts,it specifically measures the exact size of the capital return in each of the three regions and various provinces in our country.At the same time,this paper verifies that the Chinese capital is indeed from the less developed central and western regions returning to the eastern developed regions also along with the characteristics of a growing imbalance of the regional economic development characteristics.Thirdly,based on the analysis of the theoretical model,this paper selects the spatial panel regression model to analyse the data of 31 provinces(cities)from 2000 to 2012 almost 13 years and proves that the echo has a positive effect on China's overall economic growth.Further,through the using of dynamic panel model for the three regions of East,Central and West respectively used in the regression,the results of regression that echo refering to the amount of bank loan to deposit ratio and capital market financing has specific effect of the difference of economic development between regions.According to the results of theoretical models and empirical analysis,and with the purpose to shorten the differences in economic development between regions,it is necessary to set up financial institutions of policy in central and western areas,to develop small and medium class banking and financial institutions capital and to diversify development model of capital operation to improve the marginal yield of capital.Further,it is necessary to vigorously develop the securities market in central and western regions and support the advantages of the enterprise market to expand the scale of local financing,improve the financing capacity and prevent capital outflows.