Resource Allocative Disparity Between Sectors And Regions In China

Regional disparity is a common phenomenon in economic development in theworld, including both developed and developing countries. In the process of economicdevelopment, it always appears that the development speed is different amongdifferent areas. Chinese government has apparently realized the fact that thenon-equilibrium to regional economic development was resulted from its previousdevelopment policies, especially its reform and opening up policy, and commenced toimplement remedial measure. The implementation of such measures is set to curb thewidening trend of regional economic disparities and harmonize the east, middle andwestern regions'economic development. To achieve this goal, we must analyze theresource allocation that can demonstrate the status of national economy, regionaldisparity, sectors disparity, the regional disparity in inter-China trade as well asrelevant government policy.The objective of this study is to evaluate the resource allocation in the regionaldisparity. Growth rate, however, has not been uniform among regions and provincesin China. If we are able to understand the causes for disparities in regional growth, itwould contribute to our understanding of the overall process of growth in China. Theanalysis demonstrates that, during the examination of regional growth convergencesince 1990, considering the sector-wise provincial growth accounting, regionaldisparity within the context of structural change among sectors, especially on efficientresource allocation among sectors has been found. The analysis further discussed theroles of investment in industry especially in food sector and in non-food sector forregional balancing growth.By using the growth accounting approach in sector-wise for each province ofChina,the per capita income is explicitly decomposed into four parts: total factorproductivity growth effect, factor intensity deepening effect, labor allocationefficiency effect, and labor force growth effect. By testing the growth convergenceequation in considering the decomposition and using this approach, the factors for regional convergence or regional divergence can be identified. The panel data in 26provinces in China is used in this part of the study and the dataset covers three mainregions with provinces of each region respectively illustrated.The question on how investment has been allocated in the food and the non-foodindustries and among regions is of interest to us. According the finding about regionalstructural change and regional growth convergence estimation in China and thiscontext, it is desirable that our measure of disparity provides information oninvestment distribution for a regional comparison between the food and the non-foodindustries, or for a comparison of the food and the non-food industries among regions.The region division in this part of the study is slightly different from the growthaccounting and growth convergence estimation part, for finding more detailedregional satiation, this part of the study categorizes all provinces and cities into eightregions in China which include Northeast, Northern Coast, East Coast, South Coast,middle reach of the Yellow River, middle reach of the Yangtze River, Southwest, andNorthwest China. Each region contains some provinces in China. The Theil index isadopted in this part of the study.The main findings about this study show that the Regional Growth Divergence isidentified in China. Total factor productivity growth doesn't contribute to regionalbalancing development. High labor allocation effects of divergence in primary andsecondary sectors would relate to labor migration into high income regions. Laborabsorption in service sector can contribute to low income region's growth. Capitalaccumulation per labor in the secondary sector was a factor for regional growthdivergence in China. The intensive study finds that south west region where laborproductivity in food sector is higher which shows that the presence in investment offood industry in such region is more than other regions. This region's food andagricultural sector growth and spillover effects into neighbor regions may contributeto balancing growth in China.