Transportation Costs, Factors Flow And Economic Growth

With the decreasing of the transport cost, the interregional flow of human resource and capital can be expanded, the dissemination of knowledge, technology and innovation were droved, the allocation efficiency of capital and human resources were accelerated, and ultimately the economic growth are promoted. The conclusion is always mentioned in literatures, while we can hardly find any Specialized literature on the issue.From the point of view of economic, well developed transportation network with cheap accessibility is a greatest blessing for any country(Lewis, 2010). Therefore, the promoting effect of transportation on economic growth should not only be limited to the externality assessment of transportation infrastructure, but should have a study on the comprehensive mechanism that how the transportation affect economic growth by influencing factors flow. Especially for China, which is still in the "Dual Economy Structure", it is more important to study the relationship between transportation and economic growth from the perspective of transportation cost. There are two main reasons: Firstly, the short of transport infrastructure endowment in the Mid and West China is still obvious, is the "Death of Distance" which is advocated in western developed countries suitable for China, and does the cost of factors flow in China can be ignored are both worth study. Secondly, on the background regional economic coordination development policy in China, it is necessary to make it clear whether the gradual reducing of the inter-region transportation costs plays a positive role for the economic growth of Eastern and Midwest regions of China.Based on the reflection and analysis of these economic phenomena, with an attitude of back to the reality economics from the blackboard economics, try to explore the relationship between transportation and the economic growth from the perspective of transportation costs, and focus on the following 4 questions: Firstly, the transportation cost and its trend in China. Secondly, whether there is a correlation between the domestic transportation cost and economic growth from the overall economy China. Third, the mechanism that the inter-region transportation costs to regional economic growth from the viewpoint of regional economic. And finally, does the coordinated development of regional economy can be benefit from the decreasing of inter-region transportation cost.The answers to these questions requires a systematic analysis based. In the part of theoretical analysis, the proposition of macro-economic effects of transportation cost is proposed, and the basic connation of the transportation cost is redefined. And then, the two region four stage economic growth model was constructed, the mechanism of transportation cost’s effect to regional economic growth in China is clearly stated. Finally, the effect of regional transportation cost to regional economic growth difference is discussedIn the part of empirical analysis, the transportation cost calculation formula is constructed by the method of ad-valorem, and the domestic transportation cost and inter-region transportation cost is calculated. For the overall economic operation of China, the correlation between domestic transportation cost and economic output is regressed by using the improved Solow model with China’s time series data during the year of 1978 to 2013. For the regional economy, with the 1990 to 2012 years panel data of 29 provinces(municipalities and autonomous regions), the effect of inter-region transportation cost to the regional economic growth is empirical analyzed by using the methods of the first-order difference GMM and dynamic GMM. And the lastly, construct the empirical model on the basis of Mankiw(1992)balanced development model, using China’s 1985-2012 years panel data of 29 provinces(municipalities and autonomous regions), the regression test and verification of the relationship between the regional economic growth rate and the regional transportation cost is carried out in different time segment.The paper draws the following conclusions after theoretical and empirical analysis.1. As the "Friction Force" of the economy, the domestic transportation cost and inter-region transportation cost is both achieved a remarkable decrease since 1978. The calculation results show, although there is not a significant decline of the macro logistics costs in recent years, but the domestic transport costs have been greatly reduced, reached to 5.2% in 2013 from 38.1% in 1978. At the same time, the reduction of inter-region transportation cost is also obvious, during the period of year 1978 to 2012, the average inter-region transportation cost from the eastern to the central and western region decreased from 189% to 24.4%, the average inter-region transportation cost from the central region to the east and western region decreased from 186% to 24.1%, the average inter-region transportation cost from the western region to the eastern and western region decreased from 230% to 29.1%.2. The domestic transportation cost and the economic growth of China has a significant negative correlation. Analyzed from the perspective of the overall economic operation, domestic transportation costs affect economic output by influencing the final demand and industrial transfer, by using the time series data from 1978 to 2013 in China, the empirical study shows: there is a significant negative correlation between domestic transportation costs and economic growth, which indicates that the transportation cost in China can’t be ignored at present, he continuous reduction of domestic transportation cost has a positive impetus to China’s economic growth3. Inter-region transportation costs’ growth effect to the regional economy through affect the flow of production factors. The inter-region transportation costs were included in the two region four stage economic growth model, and the effect mechanism of inter-region transportation costs for regional economic growth in China were discussed, explains the reasons for stage characteristics of the regional economic development in China. The direction and scale of the factors flow has a time stage characteristic with reduction of the inter-region transportation cost, but the two regions get benefit from it. The empirical results prove the correctness of the above theory: the inter-region transportation cost plays a significant negative role in regional economic growth. However, it has a little different role for different regions, such as the central region has enjoyed the FDI investment effect driven by decreasing transportation costs.4. As predicted by the extension analysis of the theory framework of two region four stage economic growth, with decreasing of interregional transportation cost, China’s region growth rate will be inclined to "s" type, and also per capita inter region differences was inverted "U" trend. But economic growth is a complicated process, which is influenced by many factors. Is the impact of inter-region transportation costs on regional economic growth differences as same as theoretical analysis?The empirical mode was constructed according to Mankiw(1992) balanced development model, and the empirical results show that: before the year of 2000, the decreasing of inter-region transport costs caused the decline of western regional per capita economic growth rate, and it is one of the factors that cause regional economic disparities, but the relationship between inter-region transport costs and regional economic differences is not significant after the year of 2000. The rapid per capita economic growth rate of the eastern region can be attributed to the saving rate and the policy bonus before year of 2000, and the rapid growth rate in the central and western region can be attributed to the rapid increase of the saving rate, the human capital and the effect of the policy bonus after the year of 2000. Therefore, human capital, savings rate and policy bonus are the important factors that caused the regional economic differences, and also the important factor to improve the regional economy difference in China.The conclusion of the research deeps the understanding of the relationship between transportation cost and economic growth, regional economic growth and economic growth difference in China. It is proved that the new research on the macro-economic effect of transportation cost has certain practical significance and value. Compared to the previous research, the paper mainly made the following innovations: ○1 Fore the framework, put forward the macroeconomic effects of the transportation cost to solve the relationship between transportation and economic growth, combined the segmented factors of the transportation and the factor flow into one whole framework, provide a new study idea and method for the relationship between transportation and economic growth; ○2 For the research content, verified the viewpoint the that the transportation cost has a significant negative effect for the economic growth, whether the whole economy and the regional economy. The decreasing transportation cost will promote the economic growth, and will not worse the inter-region economic discrepancy.