Theoretical Analysis On The Reasons Of Chinese Territorial Economic Gap

Territorial economy is very important to the state economic development. InChina, regional economic development is a special case. Now, there is a gap betweenthe east and the others, not only in gross economic value, but also in the rate ofdevelopment. Based on this background, this paper is finished. The paper will explaintwo problems. One is the reason which influences regional economic development,and the other is feasible strategy.The reasons include two aspects. One is inner reason, and the other is externalreason. In order to analyze inner reason, the paper analyzes the panel data of all theregions in China, and builds production function for all the regions by using newclassical model. This model has a difference from General Cobb-Douglas productionfunction. The difference is that output per capital and last year's capital stock percapital have same power in the model.For external reason, the paper calculates interregional capital flow under theinfluence of state policy. With indirect influence of state policy excluded, it analyzesthe capital flow among all the regions in 2000, by computing the gap betweenacademic capital stock and real capital stock. The study finds that it was capitaloutflow in the east and in the west, and it was capital inflow in the middle. Becauseliaoning province is a special case, the study was done again without liaoningprovince. Then it finds that it was capital inflow in the east and in the middle, and itwas capital outflow in the west. So it concludes: in 2000, it was capital outflow in thewest, and it was capital inflow in the middle. Except for liaoning province, it wascapital inflow in the east.At last the paper discusses regional development strategy in two levels. One isabout state policy, and the other is about regional program. On state level, it focuseson the formation of regional policy system. By building a principle-agent model, thepaper synthesizes the views of Friedrich List,Seki Mitsuhiro and Kenneth Arrow. Andit discusses the meaning of opportunity cost to the region which will executecooperating strategy. Then it points out that the key of regional policy system are twomechanisms. One is interest compensation among regions, the other is interest share.On regional level, it discusses the logical relation among all criterions which are usedto select regional industry structure, and indicates that in order to promote regionaldevelopment, attracting capital and regional industry program should be combined.And self quality should be promoted, which will improve regional productivity.