The Effect Of Industrial Structure Change On Regional Economic Growth Disparity In China

China's booming economy has become a world concern. From 1979 to 2009, its GDP experienced an annual growth of 9.9 percent or so, while at the same time, it also faces the prbolem that increasing disparities across the whole nation. However, the existing literature shows little concern about the effect of structure change on regional economic growth. Thus in this paper, we try to complete the research in this field by considiering the role played by industrial structure change. On the other hand, China's"extensive growth"has put great pressure on its environment and resources, and then structure change is also quite useful to help the economy develop both efficiently and rapidly and also establish a resource- conserving and environment-friendly society.The literature shows that the interaction of supply-side and demand-side factors causes structure change, and thus improve economic growth. With this in mind, we then have this paper's framwork, that is, anlalyzing structure change's effect on regional economic growth from both supply side and demand side.Particularly, the dissertation include the following parts:1. We decompose labor productivity growth from 1987 to 2005 by examining six partial factors (both supply and demand): changes in value-added coefficients, labor inputs, shares of sectoral demands that are fulfilled domestically, input mix, and the intra-sectoral shares and intersectoral mix of final demand. Labor-savings have levied the largest influence on the labor productivity on all sectors across all three study subperiods. We find this transition is highly correlated with capital deepening that accompanies China's opening up process. Still, changes in the intra-sectoral shares and the intersectoral mix of China's final demand also have become quite strong, especially in recent periods. Due to ever-increasing competitive pressures as China continues to open, changes in industries value-added coefficients have tended to counteract some of the positive benefits of labor savings for most sectors. The effects on changes in labor productivity of technology change and changes in the use of imports have been comparatively negligible and any variation in their sectoral effects waning over time.2. The variance decomposition analysis reveals that both structure factors and regional factors play an important role for China's regional disparity from 1985 to 2008 and the latter became dominant only since 2003. With adjusted shift-share method, labor productivity of 31 provinces from 1978-2008 were decomposed into intra–growth effect and shift effect for 4 different period: 1978-1985, 1985-1992, 1992-2000 and 2000-2008. It's found that structure change does contribute to regional productivity growth and as time went by, structure bonus is bigger than before which showed that free labor flow enhanced the trend. Shift effect also had different performance across regions. For example, Beijing and Shanghai start structure adjustment earlier than others, thus their structure effect shows in earlier time. Structure effect is also quite obvious in those provinces with higher labor share in agriculture, which ususally located in the hinterland. While provinces like Guangdong, Zhejiang and Jiangsu though with higher labor share in secondary industry also shows strong structure effect due to labor inflow from other regions.3. Using the only two newly published multiregional input-output tables and disaggregated employment data, we decompose change in labor productivity growth for seven regions of China between 1987 and 1997 into five partial effects—changes in value added coefficients, direct labor requirements, aggregate production mix, interregional trade, and final demand. The first two factors have most great effect on labor productivity's growth, final demand follows and the other two show less yet still obvious effect. Subsequently we summarize the contributions to labor productivity of the different factors at the regional level. In this way, we present a new perspective for recent causes of China's interregional disparity in GDP per capita. When we look at the factors by region, it can be inferred that the high labor productivity growth in North China, East China, and South China derives largely from large decreases in the use of labor per unit of gross output. In the same three regions plus the Southwest, changes in intermediate input structure also improved labor productivity. Interregional trade had a clear positive effect on North China, South China and Central China. Final demand had a positive effect on all regions, which shows that it paly an important role in regional economic growth. And from the sector point of view, Trade and Transportation performed worst among all sectors.