The Resource Allocation Effect And Economic Growth Effect Of Chinese Urbanization

Should Chinese urbanization choose large cities or small cities is always the focus of academic study, and its importance has been initiated following the guideline, controlling big city and developing small city, being emphasized once again in the Chinese new-type urbanization. This paper investigates the resource allocation caused by urbanization and the development advantage change among cities using the city and firm data during 1998-2007. Empirical results show that the influence of urbanization on regional resource allocation seems like a seesaw, which we call seesaw effect. The number of new firm improves as the increasing of city’s urbanized level, while those for other type cities in near area drops down. Furthermore, analysis on the urban difference of urbanization efficiency shows that, there is a U-shaped structure between the urbanization efficiency and city size, and urbanization has a positive effect to firms’ productivity in giant cities and mini cities. However, this U-shaped structure has changing into an inverted U-shaped slowly during the sample, and the development advantage for giant cities is also transferring to middle cities. That is to say, the Chinese urbanization in future choosing middle cities will bring the best effectiveness. The government should control the sizes of giant cities to solve those social problems caused by excessive crowding, and expand the scale of middle city to avoid the efficiency lost caused by low city size.