Study On China's Dual Economic Structure And Capital Allocation Efficiency Between Urban And Rural Areas

The dual economic structure is a typical characteristic in the process of economic development in China,and the heterogeneity of urban and rural social and economic development has affected sustainable development of our economy and become an important contradiction of building a harmonious society.Compared with urban areas,the level of the economic development of the society in rural areas is relatively low.Thus,developing the rural economy is the long-term strategy of China's economic growth in the future.As China's new rural construction progresses,the rural economic development shows an increasing reliance on capital factor.However,the scarcity of capital restricts the farmers' income and the further development of rural economy in a certain extent.The third plenary session of the 18th central committee of CPC pointed out that only the public resources are allocated fairly and the factors are exchanged equally between the urban and rural areas can the system of the sound development of urbanization improve.The capital allocation efficiency reflects the effectiveness of the capital flow between urban and rural areas.Chasing the profit is the nature of the capital,and it is the difference in marginal productivity of capital between urban and rural areas that determines the capital flows.Furthermore,unbalanced economic development between urban and rural areas is the root cause of the difference in the marginal productivity of capital.In general,with the improvement of the integration of urban and rural economic and social development,the capital allocation efficiency is also improved accordingly.As a result,China's national economic is positively affected.Nevertheless,because of the different economic development strategies we take in different economy development phase,the capital allocation has different features in different stage.Therefore,a further study on the capital allocation efficiency between urban and rural areas in the different periods of the development has a positive meaning to solve the coordination problems in urban and rural economic development.At the same time,it is also beneficial to promote urban and rural dual economic structure transformation and realize the new pattern of urban-rural integration.Firstly,this paper sorts out the related theory of the dual economic structure and capital allocation efficiency,and does a theoretical analysis on the possible relationship between dual economic structure and capital allocation efficiency according to the experience of developed countries.Secondly,the actual situation after China's reform and opening up is analyzed.We explore the different development stages of the dual economic transformation and the development of capital allocation between urban and rural areas from three directions:finance,market price and banking.Then,based on the measure of the capital allocation efficiency between urban and rural areas,we examine the relationship between the capital allocation efficiency and the dual economic structure in different periods with cointegration analysis,and compare its differences between different stages of development.This paper finds that urban-rural dual economic structure in China weakened after China's reform and opening up,which means the rural economy develops rapidly.However,the capital allocation efficiency between urban and rural areas is inefficiency,and there are big gaps in marginal productivity of capital between urban and rural areas.The high risk from the fragility of agriculture and countryside results in the non-profit-driven flow from rural to urban.In addition,the relationship between dual economic structure and capital allocation efficiency presents stage characteristics.Due to the lagged development of rural financial market,the efficiency of capital allocation between urban and rural areas deteriorated further during the transition phase of dual economy to industry regurgitation feeding agriculture.This kind of situation lasted until walking into the period of dual economy of industry re-feeding agriculture and cities supporting rural areas.According to the empirical research results,this paper proposes that we should speed up the rural economic development to promote the integration of urban-rural dual economy.Besides,the government needs to give full play to its guiding function in two ways during the process of dual economic structure transformation,one for improving the agricultural and rural risk prevention and risk compensation mechanism,another for continuing to deepen the rural financial system reform.In that case,the capital may flow back to the rural areas.In addition,the government should adjust economic development strategy to improve the efficiency of capital allocation between urban and rural areas in the promoting transformation of dual economic structure.