How Market Segmentation Affects The "Resource Curse" Effect

Traditional economic theory holds that rich natural resources are an important basis for economic growth and social progress of a country or region.For example,the United States,Canada and other countries realize long-term and stable economic growth by relying on their good resource endowment.However,many scholars have found that some of the natural resource is very rich countries and regions,such as countries in Africa,the Middle East region)fails to use its resources to speed up the economic development,but in a dilemma of "resource",and resource poor countries such as Japan,Singapore and the region has made remarkable achievements.Auty(1993)first summarizes this phenomenon as the "resource curse",which means that regions with abundant resources fail to achieve ideal economic growth expectations and are instead "constrained" and "hindered" by resources.The same is true in China,where resource-rich provinces such as Heilongjiang and Shanxi have experienced slow economic growth since the reform and opening up.However,the eastern regions with relatively poor resources have achieved economic take-off by virtue of institutional reform and technological innovation.Under the background of China’s economy entering the new normal,how to break the "resource curse" and promote the sustainable development of resource-based areas is of great significance.In addition,market segmentation is another important issue that can not be ignored in the realization of high quality economic development in China.Accelerating market integration is one of the major national strategies in the new era and an important part of building a modernized economic system.It is consistent and coordinated to reduce the market segmentation and the transformation and upgrading of resource-based areas.Based on this,this paper integrates resource endowment,market segmentation and economic growth into a unified analytical framework to explore the mechanism of market segmentation on resource curse.To be specific,this paper first reviews the literature on the "resource curse" effect,market segmentation and their relationship,and points out the shortcomings of the existing literature and the starting point of this paper.Secondly,this paper makes a theoretical analysis of resource endowment into two dimensions:resource abundance and resource industry dependence,and further analyzes the theoretical mechanism of market segmentation affecting the "resource curse" effect,and puts forward a hypothesis for empirical test.Thirdly,a benchmark model is set up to examine the impact of resource endowment and resource industry dependence on regional economy,and an interaction term model is set up to test the impact of market segmentation on the "resource curse" effect.In terms of market segmentation index,this paper uses the price index method to calculate the market segmentation level within the province with the data of prefecture-level cities.Finally,in order to overcome the potential errors of the traditional interaction term model,this paper uses the functional coefficient partial linear model to test the empirical results again,which provides a new idea and evidence for the study of this problem.Through theoretical analysis and empirical test,this paper draws the following conclusions:(1)The improvement of the abundance of natural resources can promote the development of regional economy.(2)There is a negative correlation between resource industry dependence and regional economic growth.(3)There is a significant complementary relationship between market segmentation and resource endowment.A certain degree of market segmentation will strengthen the role of resource endowment.However,with the increase of market segmentation,the negative impact of resource industry dependence on economic growth is gradually strengthened.(4)New evidence from the functional coefficient partial linear model shows that with the intensification of market segmentation,the negative impact of resource industry dependence on regional economy increases rapidly,and the impact of resource abundance on economic growth also turns from positive to negative.Based on this,this paper puts forward some countermeasures and suggestions,such as attaching importance to the economic transformation of resource-based regions,practically improving the independent innovation ability of resource-based industries,deepening the reform of official assessment system,eliminating local protectionism,promoting the integration of regional markets,and promoting the free flow of factors between urban and rural areas.