The Effect Of Urbanization On Expansion Of The Residential Consumption

The guidelines of the Twelfth Five-Year Plan attach great importance to the construction of a long-term mechanism for boosting domestic demand and the transformation of economic development towards dependence on consumption, investment and export coordination. Meanwhile, the plan states that we must balance urban and rural development, proceed urbanization in an active and sound manner, accelerate the building of new socialist countryside and enhance interaction and coordinated development between regions. Hunan province, located in central China, has a low level of urbanization and consumption as well as consumption rate. Therefore, stimulating consumption through urbanization enjoys large space. This paper, based on statistics of urbanization and resident consumption of Hunan province, will explore the influencing manner and level of urbanization on resident consumption and will prove the profound influence of the former on the latter.Set against the backdrop of financial crisis, this paper, by exploring the ways that Hunan province has chosen in adjusting economic growth pattern to expand domestic demand, puts forward the view of fostering consumption through urbanization and elaborates the research significance of this approach. Also, the paper collects the related research both home and abroad, and brings its concrete research thoughts and innovations.By analyzing and summarizing the research about influences of urbanization on consumption, this paper studies the influence mechanism of urbanization on consumption growth and puts forward the five effects:“income effect”,“accumulation effect”,“co-movement effect”,“demonstration effect” and “crowding-out effect”. The paper also illuminates how the six effects boost consumption development with concrete consumption figures. Furthermore, the paper adopts evaluations of all levels from four aspects-population urbanization, economic urbanization, social urbanization and infrastructure urbanization. By using coefficient of variance to objectively give these indexes coefficient, this paper establishes comprehensive evaluation models and calculates the generalized urbanization level of Hunan during2000-2011, and then with the application of VAR model, complete a quantitative analysis on the fostering effect of urbanization on resident consumption.Lastly, in accordance with the empirical analysis mentioned above, specific suggestions are put forward as follows:1. establish an active role of the market and define government functions;2. accelerate the balanced development between urban and rural areas and strive to resolve mechanism problem affecting the integration of urban and rural areas;3. focus on industrial restructuring and boost consumption through industrial development;4. reform income distribution policies and improve the social security system;5. grasp the moment of reform, encourage innovation and promote international exchange and cooperation.