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Research on the Infurence of Foreign Trade and Industry Agglomeration on Regional Income Inequality in China

Author: YangHuan
Tutor: YuanDongMei
School: Hunan Normal University
Course: Industrial Economics
Keywords: Foreign Trade Industry Agglomeration Regional Income Inequality New Economic Geography Theory
CLC: F279.2;F124.7;F224
Type: Master's thesis
Year: 2011
Downloads: 203
Quote: 2
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Abstract


Based on the new economic geography theory, the paper describes the formation mechanisms of industrial agglomeration and the factors that influence the industry agglomeration, and explores the principles how the foreign trade induces the growth of Chinese regional income disparity by influencing the industry layout and agglomeration. This paper describes the trends of the trade openness, industry agglomeration and regional income inequality in each region of China with the 28 provincial datas in our country. Through the analysis of datas and graphics, we can draw a conclusion that the industries and foreign trade in our country mainly concentrate in easten coastal areas, and the per capita GDP in easten areas is much higher than the central and westen areas’, and also this gap is widening year by year. Seeing from the analysis on the theory and Chinese realistic situation, there are not only the comparative advantages which are revealed by traditional international trade theory in the eastern coast, but also the advantages of agglomeration and the scale economies which are the most importmant in the new economic geography theory. And the two latter kind of advantages benefiting for the economic development in the coastal region come into being with the help of the cyclic accumulate mechanism of industrial agglomeration and the automatic strengthening mechanism of economic system. So the rate of economy growth in central and westen areas is less higher. The testing result with the provincial datas show that the foreign trade itself is the engine of the economic growth, addittionly the foreign trade is benefit to form and deepen the industry agglomation, so we can say that both of the foreign trade and the industry agglomation have a significant positive impact on this areas’economis growth, at the same time, the region which has lots of industries has huge attractive to human capital, fixed captial and FDI. Due to the effect of these factors, the income gap between the core areas and the periphery areas widens correspondingly, this gap in our country represent as the inland and coastal income inequality.On the basis of the study conclusion, the paper puts forward some suggestions. Firstly, we must treat the relationship between the foreign trade, industry agglomation and the regional income inequality properly, we can’t deny the foreign trade and the industry agglomation advantages for economic growth one-sidely just because they will widen the regional income gap. By contrary, we must see them dialectically and have better try the best to make use of them to promote the technological spillover, then drive the economic growth of the backward regions. Secondly, not only the easten areas but also the central and westen areas should seize opportunities of the industrial structural upgrading and the industry transfering. The east should develop the high-tech industrial cluster, then become the center of finance, trade and technology. And that the central and westen areas should attract certain industries selectively based on their comparative advantages and build the new industry agglomation center. Finally, while buliding the new industry agglomation center, the government should try the best to play key roles of the macro adjustment, perfect the the hardware and software infrastructures. The government must further help the central and westen regions to expand the trade openness, decrease the transportation costs, increase the educational investment, attract and retain talents from all over the country. With the help of these measures to induce the industries centralize, but the most important thing is that the government can’t subsitute the market force and use the administrative measures to intervent the industry transfer.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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