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| THE CAUSALITY OF URBANIZATION AND ECONOMIC GROWTH IN CHINA——Based on Panel Data of the East, Middle, West and Northeast Regions of China in 1978-2007 |
| YAO Yi1, GUO Jun-hua2 |
1. School of Mathematical Sciences, Nanjing Normal University, Nanjing 210046, China;
2. School of Economics and Management, East China Jiaotong University, Nanchang 330013, China |
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Abstract Since the implementation of the reform and opening up policy in China, the level of urbanization has experienced a rapid growth which generates a lot of related research areas, and the relationship of urbanization and economic growth is a very important research topic. The theory of development economics considers that the agglomeration economies caused by urbanization accelerate the accumulation of physical capital, human capital and knowledge capital and so forth. Simultaneously, urbanization makes the surplus laborers migrate from rural areas to urban areas. As a result, the economy develops. For the causal relationship of urbanization and economic growth, the existing literatures are mainly based on qualitative analysis, and the researches based on panel data are less. The unit root test, co-integration test and error correction model of panel data are adopted to analyze the causal relationship of urbanization and economic growth based on panel data about 30 provinces in China from 1978 to 2007 in this paper. Taking the inconsistent development urbanization level and economic growth into account, China is divided into East, Middle, West, Northeast regions and the authors investigate the regions respectively according to regional economic theory and division method of Statistical Yearbook. The main conclusions are as follows.(1)The results of unit root test of panel data show that urbanization and economic growth of East, Middle, West, Northeast regions and the whole nation are non-stationary series, but their first order differences are stationary, which means they are integrated series of order 1. (2) The results of co-integration test of panel data indicate that the difference series of co-integration equation are stationary of East, Middle, West, Northeast regions and the whole nation, which means the urbanization and economic growth are co-integrated and there exist long term causal relationship of the four regions and the whole nation. (3) The results of error correction model of panel data explain that urbanization is the short and long term cause of economic growth of the whole nation.
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Received: 26 February 2010
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2010, Vol. 25 
