The Impact Of Economic Openness On The Urban Poverty In China

The problem of urban poverty has emerged quickly and becoming worse and worse, since China began its famous openness from 1980's. Being very different from the rural poverty, it appears more vulnerability. The poor people, mainly people lost their jobs, appear in urban areas because of the influence from the reformation and openness of the economy. About this, this dissertation makes systemic study on the impact of economic openness on the urban poverty, with the methods of integrating theory with practice, qualitative analysis and quantitative analysis.The study includes the following three sections:Section I (Chapter 2) describes the trends of China's urban poverty in the open economy condition. On the basis of the reviews of China's opening processes, this paper firstly estimates the opening degree in China with the method of the principal component analysis. It shows that China has evolved step by step from a closed economy to an open economy. However, the opening developments are imbalanced, so that there has been gradually increasing differences of the opening degrees between the East and the West. Secondly, the trends of China's urban poverty in the open economy condition are described by the poverty identifications, the aggregate poverty measurements, the distributions of the poor and the causes of poverty. It indicates that the relative poverty line will be better to indentify poverty in the open economy. So, the present minimum subsistence level is not appropriate and the government should raise the minimum subsistence level based on the relative poverty line. If the relative poverty line is chosen to indentify poverty, the aggregate poverty has benn increased notably since the economy opened, while it seems to decrease in the same time as the absolute poverty line is chosen to indentify poverty, because economic growth arisen by openness has increased income level of the urban poor effectively, but inequality of income distribution has reduced the poverty alleviation effect induced by growth. Moreover, the urban poverty presents concentrative that the poor are mostly the unemployed and the unhealthy people, and the poor gather in certain areas and industries. Therefore, economic growth and inequality of income distribution are the macro causes of the urban poverty, as well as the poor people's quality differences and employments as micro causes.Section II (Chapter 3) analyses the impact of economic openness on the urban poverty through the transmission mechanism of growth inequality–poverty channel, and discovers the"threshold effect". At first, the linkage of the openness and the growth is tested by the way of co-integration analysis, and it demonstrates that the openness is good for economic growth in China, but the impacts are different from regions. Then, the paper analyses the linkage of the openness and the inequality, which shows that openness induces the income divergence between the industries and the areas. Because that on one hand, the openness promotes economic growth, and on the other hand, it worsens the inequality, whether the openness affects the urban poverty depends on the interaction between the economic growth and the inequality. Therefore, it is found out that although the economic growth alleviated the urban poverty to a great extent, the worsened inequality blocked the anti-poverty effects of the economic growth. Thus, the impact of the economic growth upon the urban poverty is of uncertainty, which is influenced by the opening degree. In other words, the"threshold effect"exists, which is tested from following three respects. (1) The co-integration analysis for the national data reveals that trade liberalization goes against the urban poverty while FDI favors the urban poverty. On the whole, openness is good for urban poverty reduction, which is influenced by the opening degree. (2) The co-integration analysis for the provincial data confirms that opening degree does really affect the results. In some provinces with higher opening degree, the openness will reduce the urban poverty distinctly, while in the other provinces with lower opening degree, the openness will block the urban poverty reduction. (3) The econometric regression with provincial panel data makes sure that the"threshold effect" does really exist. Only if the opening degree gets across the"threshold value", the economic growth will alleviate the urban poverty.Section III (Chapter 4) analyses the transmission mechanisms of the employment channel and the price fluctuation channel.First, the effects of openness on the employment are two-faced. The poor people's conditions will be improved due to the raising employments promoted by the openness. However, the living conditions of the poor people who work in import sectors and the sectors affected by FDI crowding-out effects will be worsened. Second, the impact of the price fluctuation is also two-faced. Price level will increase by opening. Accordingly, whether the poor people, as consumer, actually gain or lose from openness depends on whether or not they are net buyer of tradable goods. Third, the other channels, as the technology channel, the factor mobility channel, the vulnerability channel and the institutions channel, are also uncertain. Some poor people become winner and the others become loser.The most remarkable difference of this dissertation is that the problem of urban poverty is discussed as viewed from the openness, in which the impact of economic openness on the urban poverty is analysed through the growth inequality-poverty channel, the employment channal and the price fluctuation channel. It is found out that there has been"threshold effect"in the linkage of economic openness and the urban poverty. As a result, the government should exert the advantageous influence of economic openness on the urban poverty in the East, and reduce the inequality in the West. In addition, the impact of economic openness on the urban poverty is uncertain through the employment and price fluctuation channels, which suggests the government to restrain these uncertainties to alleviate the disadvantage impacts.