The Theory And Empirical Research Of China's Economic Growth Convergence

The classical definition of economic growth convergence refers to the process economic growth of poor economies catching up with that of rich economies in the long run.The hypothesis of economic growth convergence originated from the neoclassical growth model(Solow,1956),which mainly contains three core issues: First,whether there is convergence,that is,to judge the existence of convergence;second,why there is convergence,that is,to analyze the convergence mechanism;third,how to promote converge,that is,to explore the influencing factors of convergence.This is an important but very complex issue.First,convergence answers the question of narrowing the economic gap,which is a realistic problem that any economy must pay attention to.In the past half century,economists have been trying to analyze the formation of income disparity among economies and the underlying causes,and the convergence hypothesis has become the main tool for analyzing income disparity at the aggregate level in the past two decades.Secondly,economic growth convergence involves different economic growth theories,and different theories have different effects on the conclusion of convergence.Therefore,the academic community has not yet given a universal theoretical framework and empirical conclusions about convergence,which is the complexity of the study of convergence.The theory of economic growth convergence is very convincing for understanding the future trend of regional disparity.It provides a description for narrowing the economic gap between underdeveloped countries and developed countries and narrowing the economic gap between regions within a country.Meanwhile,the theory of economic growth convergence also has strong policy implications,which can provide theoretical support and realistic basis for the government's policy implementation.In fact,the research on the convergence of economic growth has always been the focus of academic circles and policy makers.In recent years,China's domestic and foreign environments have undergone profound changes,and its economic development has entered a critical period of transformation.Internally,China is faced with the contradiction between unbalanced and inadequate development and the people's ever-growing needs for a better life.Externally,China is faced with the test of leaping from a middle-income stage to a high-income level.These two major challenges are in response to the convergence problem in economic growth theory.The former is about convergence between the regions within China,while the latter is to consider China as an individual and its convergence with other countries in the world.In this context,this paper examines internal and external convergence characteristics of China from perspectives of “horizontal convergence” and “vertical convergence”.Firstly,the “vertical convergence” mainly studies the convergence process of unitary economy approaching its own steady state.While the “horizontal convergence” mainly studies the process of multiple economies catching up with each other and converging towards a common steady state.According to the differences of research subjects,the study of “horizontal convergence” can be subdivided into two levels.The first level mainly studies the characteristics of convergence among regions within China,particularly the convergence of China's regional economic growth in quantity and quality.The second level mainly studies the characteristics of convergence among global economies,verifying the two convergence mechanisms of “capital convergence” and “technology convergence” and judging the convergence of China's economic growth.Firstly,this paper analyzes the phased characteristics of China's economic growth convergence from the overall national level.First of all,we identify the convergence path of China's economic growth through the theory of economic growth convergence and judge the convergence stage of China with threshold regression model.Then,a Time-varying parameter vector autoregressive model with potential threshold variables is used to explore the role of the two major driving factors of finance and technology in the process of China's convergence.The results show that China's current economic growth is in the convergence curve of middle income,and it is difficult to successfully converge to the curve of high-income stage only by changing the driving factors of economic growth can China achieve high-income levels.Therefore,in order to successfully achieve high-income levels,we need to promote the in-depth integration of technology and finance,and explore the development potential of the two major factors.Secondly,this paper studies the convergence of the quantity of economic growth.In this chapter,the technology spillover effect is added to the Mankiw-Romer-Weil model to obtain the theoretical form of spatial externality in the economic convergence model.Then the Spatial Durbin Model is used to test the convergence and spatial spillover effects between provinces in China.On this basis,we use the Two-Regime Spatial Durbin Model to study the asymmetry of the spatial spillover effects between China's provinces and its influence on the convergence of economic growth.The results show that provinces in China have significant positive spatial correlations and satisfy the condition convergence.However,the spillover effect between provinces is asymmetric both in volume and direction.And these two asymmetries have different effects on regional economic convergence.At the current stage of China's decelerated growth,less developed provinces with sliding growth rate will form an obvious push-down spillover among other similar less developed provinces within the same region.The impact of this spillover on developed provinces is relatively limited.Under the combination effect of the two spillover effects,the Chinese economy has experienced a phased regional polarization.Thirdly,this paper studies the convergence of quality of economic growth.In this chapter,we use a hierarchy dynamic factor model to model the quality of economic growth in China.Subsequently,we use Granger causality test to identify the linkage mechanism of economic growth quality between regions.Finally,we analyze the convergence characteristics between regions by calculating the C-M synchronization index.The results show that the business cycles in the Midwest follows those in the East,while those in the Northeast stays relatively independent.From the perspective of the synchronization level within the region,the quality of provincial economic growth in the eastern,central and western regions has begun to take on the characteristics of club convergence,which to a great extent alleviates the hidden dangers of unbalanced and inadequate development caused by individual alienation.However,it is worth noting that in recent years,there are unique constraints and growth shackles among provinces in Northeast China,and they have not shown the convergence characteristics.Then,this paper analyzes the “capital convergence mechanism” of economic growth.In this chapter,we make some theoretical explanations on the club convergence of economic growth,and then,we obtain the nonlinear correlation between financial development and economic growth from the dynamic evolution of technological gap.To further test the theoretical conjecture,we use a dynamic panel threshold model to make an empirical test.The results show that the impact of financial development on economic growth has a double threshold characteristic.Specifically,when the level of financial development is lower than the first threshold,one country's economic growth will not converge to the growth rate of global frontier,exhibiting a financial constraint effect,but its steady-state growth rate will increase as the financial level increases;when the level is between the two thresholds,the probability of convergence will improve a lot;finally,when the counterpart exceeds the second threshold,the pulling effect will gradually decline,showing a prominent property of diminishing margin.Finally,this paper analyzes the “technology convergence mechanism” of economic growth.Firstly,we use the nonlinear time-varying factor model to analyze the club convergence and describes the “middle-income trap” from the perspective of convergence.Subsequently,we further explore the improvement path of total factor productivity through the Technology Frontier Convergence Model to judge the essential conditions for countries to converge to high-income countries.The results show that the “middle-income trap” is unstable in the long term,but this unstable state is not easy to break,and the jump can only be achieved by having the corresponding convergence conditions.The increase of total factor productivity is the key to convergence of countries to the high-income level.The convergence path can be divided into three phases.In the low-income phase,TFP can be upgraded through technical imitation.In the phase of the transition from low-income to middle-income,it is necessary to make use of technological imitation and technology spillovers to stimulate TFP.While in the phase of the transition from middle-income to high-income,it is necessary to improve the capability of independent innovation.This paper makes a comprehensive and systematic analysis of the convergence characteristics of China's economic growth from different perspectives and dimensions.From the perspective of regional convergence analysis,China's economic growth has the characteristics of conditional convergence.However,the unbalanced pattern of regional development has not really changed and the differentiated development strategy still needs to be implemented.From the perspective of convergence at the world level,China is currently in the middle-income stage,and will inevitably experience a period of slowdown and adjustment of economic growth.Convergence to higher income levels requires unswerving implementation of innovation-driven development strategies to achieve sustainable growth momentum.