Industrial Structure, Administrative Monopoly And Economic Growth

In 2010, China's central government has clearly illuminated its development goal about "adjusting economic structure and maintaining its growth" when they wrote their 12th five year plan. The global economic crisis began from 2007 has made how to adjust its industrial structure and industrial distribution significantly important to whether China's economy can maintain its persisting and healthy development. From 1978 to now, especially the 1990s, China has gotten its outstanding development achievements in all sides which arrests the eyes from all over the world. Its society and economy have gotten the development it never has before which the western countries call it "The China's Growth Miracle". But how to sustain the miracle becomes the most important mission for Chinese government's whole 12th five year plan and its industrial adjusting.With China's development in its Opening-up progress, the scholars have paid more attention to the increasing important role China's local government has played. On the one hand, China's local governments make their remarkable success on their economic performance through its economic policies. On the other hand, with the power decentralization which is characterred by fiscal decentralization is carried on, China's local governments have increasing powers to affect its markets. On the same time, the local governments have a more and more increasing willing to monopolize the economic rents in its area. A problem which cannot be ignored is that the local administrative monopoly such as local government protection as well as markets segmentation becomes more and more. The obvious impacts it brings are that the local administrative monopoly increases problems such as the limitation of China's resources'and factors'mobility, industrial structure convergence, the duplicated construction as well as the bad investment efficiency. However, a very interesting question is that even the local administrative monopoly makes the comparative advantages of China's markets and scale effects of China's whole markets slow down, China's local governments always have their incentives to use these policies to influence its economic lives which seems to prove that the local governments have gotten something from these policies. The reason for this is that the local governments'administrative monopoly itself does not increase its utility, since even though the administrative monopoly ensures local governments'revenue and employment, its consistency and persistency will be seriously influenced without the support of its economic growth. Therefore, based on these consideration, this paper tries to investigate the influences the local governments'policy designing has on its industrial adjusting and it economic growth, from which the author hopes to find more sensible ways and explanation for "adjusting the structure and maintaining the economic growth" policy.This paper drew its conclusion by analyzing the relationships between Chinese local administrative monopoly, industrial structure and economic growth based on 29 Chinese provincial penal data from 1994 to 2007:Currently, regional administrative monopoly and local economic growth have the anti-U shaped relationship and administrative monopoly effectively improves its economic growth for most provinces. At the same time, the different market structures between Chinese different regions significantly improves China's economic growth. However, with the policy of local administrative monopoly, the difference of Chinese local markets are limited. The local administrative monopoly improves Chinese local economic growth as well as slows its industrial difference progress, which prohibits the comparative advantages and scale effects of Chinese regional markets. The short-run economic performance which depends on local administrative monopoly is at the price of the long-run scale effects of Chinese's whole markets.This paper are mainly divided into five parts:Introduction, Literature Review and Basis of the Research, Model, Index, Data and Explanation, Empirical Analysis and Tests and Conclusion and Policy Application. Introduction (Chapter One) shows the issue this paper concerned and tried to investigate as well as giving a brief explanation of the background, significance, structure, innovation and shortages of this paper. In Literature Review and Basis of the Research part (Chapter Two), I mainly reviewed the literatures of economic growth from the perspectives of industrial structure, local administrative monopoly and the relationship between local administrative monopoly and industrial structure and also gave a brief evaluation of current researches related to this paper's research area. The Model, Index, Data and Explanation part (Chapter Three) explained the models and data which will be used in later empirical analysis. Empirical Analysis and Tests (Chapter Four) empirically analyzed the relationships between industrial structure, local administrative monopoly and economic growth. Conclusion and policy application part (Chapter Five) concluded the main conclusions of this paper and gave relative policy applications related to this paper.