Government Favoritism, Administrative Hierarchy And Urban Development

From a historical perspective, urban development and economic growth are often inseparable. Along with the miracles of economic growth for more than 30 years reform and opening up, China’s rapid development of cities, big cities and mega-cities continue to emerge, the urbanization rate has jumped from 17.92% in 1978 to 53.70% in 2013. In western developed countries, urban development more relies on market. However, urban development in China is promoted by government. In existing research, this situation is defined as the government favoritism. In China, there is a strict administrative hierarchy between cities which contains the priority allocation of resources and using the right arrangements. In other words, government favoritism is conducted by administrative hierarchy in China.Firstly, the article established a mathematical model among natural conditions, administrative level and economies of scale. The model explains how government favoritism is shaped. The model is also taking historical factor and economic and social factors into account in the analysis process. It is worth noting that higher administrative hierarchy is superiority on the expansion of the urban population than other factors.Secondly, using census data, resident population and urban population size, the article analyze the impact of political power on urban population growth. Empirical results show that the Government favoritism not only speeds up the formation of the city, but also contributed to the rapid growth of the urban population. The higher the administrative hierarchy is the more favoritism the government is given and the faster the urban population growth. Furthermore, the diversity in population growth makes the high administrative hierarchy city more crowded than other cities. It is also lead to the hukou registration system is unable to achieve the target that guided migration so as to optimize the structure of city size.Thirdly, the article builds an optimal scale model of the city based on the framework of new economic geography. The model establishes a relationship between the output and the city scale and derives the relationships between city optimal scale and the industrial structure. In empirical analysis of China for example, the empirical results show that there is an inverted "U" type relationship between output and city optimal scale. That is to say, as the population increases, economies of scale increased then decreased. Cities optimal size change with the industrial structure, because the labor absorption levels of service industry is higher than manufacture industry. Therefore, manufacture oriented cities’ optimal scale is lower than service oriented cities’. The result have also shown that deviate from the optimal size of the city will bring in revenue losses. In addition, empirical studies have also shown that optimum scale level is also affected by the market potential, technology, knowledge, capital and other aspects.Finally, based on the conclusions we put forward the policy implications.(1) The central government should promote harmonious development of cities and create a policy environment for fair competition among cities. Market play a decisive role in the allocation of resources, so that small cities and big cities can obtain reasonable development(2) In the process of urban development, ecological and environmental protection should be regard, thus enhancing the attractiveness of the city.(3) Promoting the development of city services and manufacturing.